Nauro Campos, Corrado Macchiarelli, 19 October 2016

Explanations for the Eurozone Crisis rely on the notion of cross-country asymmetries. The core-periphery pattern to the EU was first established by Bayoumi and Eichengreen in 1993, prior to the Eurozone. This column replicates their approach to explore whether the euro has strengthened or weakened this pattern. A new ‘coreness index’ indicates that the core-periphery pattern has weakened, and that a new, smaller periphery has emerged.

Igor Masten, Ana Grdović Gnip, 13 October 2016

Fiscal policies in European Economic and Monetary Union states are being reinforced. This column argues that the cyclically adjusted budget balance will be an imprecise tool for measuring fiscal discipline, and structural deficit rules limits are too stringent. If the official methodology is used to trigger corrective fiscal contractions, it may increase macroeconomic instability.

Sylvester Eijffinger, 31 August 2016

The ECB is under fire from all sides for its inability to stimulate Europe's economies. This column puts the case for an informal European ‘praesidium’ within the Eurogroup to coordinate wider stimulus and reform measures. This will inevitably lead to the appointment of a European finance minister – the Eurozone's equivalent of Alexander Hamilton, the first Treasury Secretary in the history of the US.

Philip Lane, 23 August 2015

This paper examines the cyclical behaviour of country-level macro-financial variables under EMU. Monetary union strengthened the covariation pattern between the output cycle and the financial cycle, while macro-financial policies at national and area-wide levels were insufficiently counter-cyclical during the 2003-2007 boom period. We critically examine the policy reform agenda required to improve macro-financial stability.

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Kick-off Conference of the ADEMU project (A Dynamic Economic And Monetary Union). Hosted by University of Cambridge, October 8-9, 2015. More information and registration: http://ademu-project.eu/

Paul De Grauwe, 07 September 2015

Economists were early critics of the design of the Eurozone, though many of their warnings went unheeded. This column discusses some fundamental design flaws, and how they have contributed to recent crises. National booms and busts lead to large external imbalances, and without individual lenders of last resort – national central banks – these cycles lead some members to experience liquidity crises that degenerated into solvency crises. One credible solution to these design failures is the formation of a political union, however member states are unlikely to find this appealing.

Carmen Reinhart, 09 July 2015

Contrary to the intent of the designers of what was to be an irreversible currency union, Greece may well exit the Eurozone. This column argues that default does not inevitably trigger the introduction of a new currency (or the re-activation of an old one). However, if ‘de-euroisation’ is the end game, then a forcible (or compulsory) currency conversion is likely to be a central part of that process, along with more broad-based capital controls. 

Reuven Glick, Andrew Rose, 15 June 2015

The Economic and Monetary Union in Europe has recently been the source of a lot of pain. Its economic benefits often seem a lot harder to measure.  This column reconsiders earlier opinions on the trade effects of currency unions using the latest data and methodologies. It suggests the euro has at least a mildly stimulating effect on exports.  However, the switches and reversals across methodologies do not make allowances for any bold statements.

Michal Kobielarz, Burak Uras, Sylvester Eijffinger, 12 March 2015

The Eurozone Crisis has been characterised by a sharp rise in sovereign interest rates in peripheral countries. The re-emergence of spreads between peripheral and core Eurozone countries at the start of the Greek crisis came after a decade of homogeneous interest rates in the monetary union. This column investigates the behaviour of spreads through the lens of a theory of implicit bailout guarantees.

Paul De Grauwe, 07 July 2014

There has been a stark contrast between the experiences of Spain and the UK since the Global Crisis. This column argues that although the ECB’s Outright Monetary Transactions policy has been instrumental in reducing Spanish government bond yields, it has not made the Spanish fiscal position sustainable. Although the UK has implemented less austerity than Spain since the start of the crisis, a large currency depreciation has helped to reduce its debt-to-GDP ratio

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

Although progress has been made on resolving the Eurozone crisis – vulnerable countries have reduced their current-account deficits and implemented some reforms – more still needs to be done. This column argues for a ‘consistent trinity’ of policies: structural reforms within countries, more symmetric macroeconomic adjustment across countries, and a banking union for the Eurozone.

Espen Henriksen, Finn Kydland, Roman Šustek, 02 October 2013

The monetary policy for Eurozone members is one-size-fits-all in an economic area rife with economic differences. Does this really make a difference? This column argues that even if each EZ member state had a fully independent monetary authority, monetary policies would likely still appear highly synchronised across EZ members.

Daniel Gros, 24 August 2011

Eurobonds are being touted as the silver bullet to resolve the Eurozone crisis. This column argues that the Eurobonds proposal fails on legal, political, and economic grounds. It says that, whatever the variant, Eurobonds only make sense in a political union—and given the vast differences in national political systems and their quality of governance, any political union created on paper will not work in practice.

Philip Lane, 14 March 2011

CEPR DP8287 seeks to explain the origins of the Irish crisis and provide an interim assessment of the Irish government’s management of the crisis. Finally, it evaluates the lessons from Ireland for the macroeconomics of monetary unions.

Francesco Mongelli, 01 May 2010

CEPR Policy Insight No. 47 argues that the benefits of a monetary union develop gradually over time and require policymakers to seize opportunities and perseverance in the face of adversity.

Francesco Mongelli, 01 May 2010

Why would countries share a single currency? This column introduces a new CEPR Policy Insight and argues that some aspects are missing in the current debate on the merits of the EMU. Benefiting from monetary union is a matter of time, perseverance, and seizing opportunities.

Mathias Hoffmann, 20 March 2010

If a European Monetary Fund does happen, how would it work? This column proposes a European Sovereign Insurance Scheme to sell bond insurance on EMU members' sovereign debt. In good times the insurance fees would allow the EMF to build up a capital cushion. In bad times, the EMF could use these funds to facilitate an orderly unwinding of the default – while imposing tough conditions.

Francesco Mongelli, 11 March 2010

This new Policy Insight asks why countries would share a single currency, and addresses some aspects missing from the current debate on the benefits of the euro area.

Francesco Mongelli, 11 March 2010

Why would countries share a single currency? This column introduces a new CEPR Policy Insight and argues that some aspects are missing in the current debate on the merits of the EMU. Benefiting from monetary union is a matter of time, perseverance, and seizing opportunities.

Roel Beetsma, Massimo Giuliodori, 27 November 2009

Currency unions strip national governments of a macroeconomic policy instrument. What do they get in return? This column says the European Economic and Monetary Union has eliminated incentives for competitive devaluations and enhanced inflation credibility. But monetary union may necessitate fiscal coordination and discipline.

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