Revisiting the pain in Spain

Paul De Grauwe 07 July 2014

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The different macroeconomic adjustment dynamics in Spain – a member of a monetary union – and the UK – a stand-alone country – is stark. Paul Krugman popularised this contrast in his New York Times blog with the title “The Pain in Spain” (Krugman 2009, 2011), and commented on my own analysis in De Grauwe (2011).

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Topics:  Europe's nations and regions Global crisis Macroeconomic policy

Tags:  ECB, monetary policy, euro, EMU, Spain, monetary union, fiscal policy, UK, government debt, austerity, EZ crisis, Outright Monetary Transactions, currency depreciation

Delivering the Eurozone ‘Consistent Trinity’

Marco Buti, Maria Demertzis, João Nogueira Martins 30 March 2014

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As argued in an earlier commentary, the financial crisis exposed important economic inconsistencies in the way that EMU operated.1 Although progress has been made, the reality is that more needs to be done. A number of countries still need to consolidate their public finances further, and also implement structural reforms to promote growth and sustain satisfactory welfare systems. At the same time, there is a need for vulnerable countries to ensure consistency between regaining competitiveness and the sustainability of private and public debts.

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Topics:  Europe's nations and regions Macroeconomic policy

Tags:  eurozone, euro, EMU, imbalances, fiscal policy, structural reforms, fiscal consolidation, debt, Eurozone crisis, Stability and Growth Pact, banking union, internal devaluation

Independent monetary policies, synchronised outcomes

Espen Henriksen, Finn Kydland, Roman Šustek 02 October 2013

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The recession in the Eurozone has given new life to optimal-currency-area thinking. The argument goes that the disadvantages of a single currency come from the loss of flexibility and ability to use monetary policy to respond to “asymmetric shocks” (Krugman and Obstfeld 2009). The often-unarticulated presumption is that countries with independent monetary policies would make different policy decisions as long as contemporaneous shocks to output and employment were asymmetric.

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Topics:  Exchange rates Monetary policy

Tags:  inflation, monetary policy, EMU, Central Banks, capital controls, exchange-rate policy

Eurobonds: Wrong solution for legal, political, and economic reasons

Daniel Gros 24 August 2011

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The term “Eurobond” is usually taken to mean a bond which has a “joint and several” guarantee by all member states of the Eurozone (see for instance Manasse 2010 and Suarez 2011). The “joint and several” guarantee implies that if the issuing country cannot service its “Eurobond” debt the creditors can demand payment from all other Eurozone countries.

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Topics:  EU institutions EU policies Europe's nations and regions Financial markets International finance Politics and economics Taxation

Tags:  Italy, Germany, EMU, Spain, Greece, Eurozone crisis, political union, Portugal, eurobonds

The Irish Crisis

Philip R. Lane,

Date Published

Mon, 03/14/2011

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EU institutions EU policies Europe's nations and regions Macroeconomic policy

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Some observations on 'political' in EMU

Francesco Paolo Mongelli,

Date Published

Sat, 05/01/2010

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Europe's nations and regions Monetary policy

URL

http://www.cepr.org/pubs/PolicyInsights/PolicyInsight47.pdf

Download CEPR Policy Insight No. 47 free of charge here.

Tags
eurozone, EMU, monetary unions

Some benefits and costs from participating in a monetary union

Francesco Paolo Mongelli 01 May 2010

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Conventional wisdom views the benefits and costs from monetary unions as straightforward. The costs are macroeconomic– reduced influence over stabilisation policy – while the gains are microeconomic – improved economic efficiency. This is the perspective taken by most comments on the Eurozone’s recent travails (see Krugman 2010). The reality is more varied. The benefits and costs from sharing a single currency vary over time as well as by country.

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Topics:  Europe's nations and regions Monetary policy

Tags:  eurozone, EMU, monetary unions

How Europe should harness market forces to deal with sovereign credit risk

Mathias Hoffmann 20 March 2010

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The sovereign debt crisis has revealed the lack of a mechanism for an orderly unwinding of fiscal imbalances and default in the Eurozone. Markets expect that the big EMU countries will eventually have to bail out Greece to avoid contagion to other, bigger countries and to defuse systemic risk for their own banking sectors. There is wide agreement that such a mechanism is urgently needed.

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Topics:  Europe's nations and regions International finance

Tags:  EMU, sovereign debt, European Monetary Fund

On the benefits and costs of a monetary union

Francesco Paolo Mongelli,

Date Published

Thu, 03/11/2010

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URL

http://www.cepr.org/pubs/PolicyInsights/CEPR_Policy_Insight_046.asp
Tags
eurozone, EMU, monetary unions

Some benefits and costs from participating in a monetary union

Francesco Paolo Mongelli 11 March 2010

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Conventional wisdom views the benefits and costs from monetary unions as straightforward. The costs are macroeconomic– reduced influence over stabilisation policy – while the gains are microeconomic – improved economic efficiency. This is the perspective taken by most comments on the Eurozone’s recent travails (see Krugman 2010). The reality is more varied. The benefits and costs from sharing a single currency vary over time as well as by country.

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Topics:  Europe's nations and regions Monetary policy

Tags:  eurozone, EMU, monetary unions

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