The problems of European monetary union – asymmetric shocks or asymmetric behaviour?

Andrea Boltho, Wendy Carlin 31 March 2012

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Much of the literature that was sceptical of the prospective success of the euro feared the effects of Mundellian asymmetric shocks on an area which (unlike the US) had little inter-country labour mobility and no common fiscal policy. Early research, for instance, pointed out that Europe’s periphery, in particular, had suffered from large idiosyncratic shocks in comparison to Europe’s core, let alone to US regions (Bayoumi and Eichengreen 1992). This, many felt, could create difficulties for the operation of a monetary union.

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Topics:  Europe's nations and regions

Tags:  eurozone, growth, governance

From vicious to virtuous: A five-point plan for Eurozone restoration

Marco Buti, Pier Carlo Padoan,

Date Published

Tue, 03/27/2012

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http://www.cepr.org/pubs/PolicyInsights/CEPR_Policy_Insight_061.asp

Download CEPR Policy Insight No. 61 here [1]. [1] http://voxeu.org/sites/default/files/file/PolicyInsight61.pdf

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eurozone, growth, fiscal consolidation

From a vicious to a virtuous circle in the Eurozone - the time is ripe

Marco Buti, Pier Carlo Padoan 27 March 2012

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The economic and financial crisis in the Eurozone is in its fourth year. In late 2011, it had evolved dangerously into a vicious circle of sluggish growth, tensions in sovereign debt markets and banking sector fragility. Investor confidence in the Eurozone seemed on the verge of collapse, many sovereigns and banks struggled to access market funding and the future of the Eurozone was widely questioned in financial markets and the policy debate.

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Topics:  Macroeconomic policy

Tags:  eurozone, growth, fiscal consolidation

Fiscal consolidations for debt-to-GDP ratio containment? Maybe … but with much care

Gianluca Cafiso, Roberto Cellini 20 March 2012

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In recent time a wide debate has been developing concerning the effects of restrictive fiscal policies on the dynamics of the debt-to-GDP ratio (eg Corsetti and Müller 2012). The debate is nourished by the current experience of EU countries, where fiscal-consolidation policies are implemented.

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Topics:  Macroeconomic policy

Tags:  eurozone, debt, austerity

Fed versus ECB: How Target debts can be repaid

Hans-Werner Sinn 10 March 2012

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Now that Bundesbank President Jens Weidman has expressed his concern about the rising TARGET balances within the Eurozone in an official letter to Mario Draghi, the issue can no longer be swept under the carpet. In February, the Bundesbank had a TARGET claim of €547 billion on the Eurosystem, while the Dutch central bank had one of €171 billion in January. These claims constitute more than half of both countries’ net foreign wealth.

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Topics:  International finance

Tags:  ECB, eurozone, TARGET2

Brinkmanship in Brussels, Sturm and Drachma for Greece and Europe

Jacob Funk Kirkegaard 01 March 2012

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Just as it did when Congress recently extended the payroll tax cut, brinkmanship has produced an early-morning deal in Europe to extend a new lifeline to Greece and clear the way for the biggest sovereign bond restructuring in history. Both pieces of the agreement – the privately held Greek debt write-down of more than €100 billion and the terms of the new bailout extension – have produced widespread doubts in markets and among many analysts.

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Topics:  International finance

Tags:  eurozone, IMF, Greece

Apart from the fiscal compact – on competitiveness, nominal wages and labour productivity

Marga Peeters, Ard den Reijer 03 January 2012

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Eurozone members that face the consequences of severe asymmetric shocks can, in the absence of labour mobility, accommodate by means of fiscal transfers. In order to avoid becoming a one-way transfer union from the core to the periphery, the EU needs to address structural imbalances and persistent current-account deficits and surpluses that are due to real exchange-rate misalignment.

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Topics:  EU policies Productivity and Innovation

Tags:  eurozone, productivity, wages

Deleveraging in the Eurozone

Vincent O'Sullivan, Stephen Kinsella 17 December 2011

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The capital shortfall at EU banks is 8% higher than originally thought, according to the latest assessment from the European Banking Authority (EBA 2011) released on 8 December. In the aggregate, European banks need to raise €114.7 billion as an exceptional, temporary capital buffer against sovereign debt exposures and to ensure their individual Core Tier 1 capital ratio reaches 9% of risk-weighted assets by the end of June 2012.

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Topics:  Financial markets International finance

Tags:  eurozone, leverage, banks

From trade to domestic collapse? On the complementarity between exports and domestic sales

Nicolas Berman, Antoine Berthou, Jérôme Héricourt 16 December 2011

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The Eurozone is close to slipping into a recession. The most recent OECD forecasts point to an average growth of 0.2% of GDP in volume within the EZ151 in 2012, ranging from -3% (Greece and Portugal) and -0.5% (Italy), to +0.6% (Germany) and +1% (Ireland).

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Topics:  International trade

Tags:  eurozone, exports, French firms

The interplay of sovereign spreads and banks’ fragility in the Eurozone

Damiano Sandri, Ashoka Mody 23 November 2011

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European policymakers are confronting a heightened crisis characterised by a perverse and seemingly intractable interplay between sovereign debt pressures and financial-sector fragilities (Wolff 2011). Three questions arise:

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Topics:  Financial markets International finance

Tags:  eurozone, spreads, banks

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