The boom-bust cycle in the Eurozone between 2000 and 2008 is essentially a story of cyclical asymmetries between the Core and the Periphery. While stressing the importance of addressing these asymmetries – especially via fiscal policy – the ECB has failed to take them explicitly into account in its own policy-setting. This essay argues that these asymmetries may persist precisely because they are not a central target of stabilisation policy – both fiscal and monetary.
Tommaso Monacelli, 12 February 2016
Paul De Grauwe, Yuemei Ji, 12 February 2016
The Eurozone Crisis has abated but the question about the future of the euro remains on the agenda. This column discusses some of the design failure of the Eurozone and their possible solutions. The Eurozone in its current state is not an optimal currency area and is fragile. Ideally, a stabilisation fund and a budgetary union should be set up. Since this is politically unobtainable right now, small steps should be implemented to create some fiscal space at the level of the Eurozone, and to start with a limited programme of debt consolidation.
Barry Eichengreen, Charles Wyplosz, 21 December 2012
One of the world’s most influential international economists, Peter Kenen, passed this week. This column highlights the key role his insights played in the construction of the Eurozone and the problems that arose when his insights were ignored.