Alberto Cavallo, Brent Neiman, Roberto Rigobon, 29 November 2013

During the recent turmoil in the Eurozone, little attention has been paid to one of the euro’s founding objectives – price convergence. This column argues that the euro has in fact been very successful in this regard. In a study of the pricing behaviour of Apple, IKEA, H&M, and Zara, the authors find that price dispersion is 30–50% lower for countries in a currency union than for those with a fixed exchange rate.

Jens Nordvig, 25 November 2013

Having promised to do ‘whatever it takes’ to ensure the survival of the euro, the ECB now faces the problem of record high unemployment combined with a strong currency. There is accumulating evidence that the ECB is more willing to fight currency appreciation than the Bundesbank would have been. Capital inflows have been a key source of recent upward pressure on the euro. Should this continue, the ECB may need to intervene more aggressively in order to promote economic recovery in the Eurozone.

Jesús Fernández-Villaverde, Luis Garicano, Tano Santos, 30 April 2013

By the end of the 1990s, under the incentive of Eurozone entry, most peripheral European countries were busy undertaking structural reforms and putting their fiscal houses in order. This column argues that the arrival of the euro, and the subsequent interest-rate convergence, loosened a tide of cheap money that reversed the incentives for further reforms. As a result, by the end of the euro’s first decade, the institutions and governance in the Eurozone periphery were in worse shape than they were at the start of the decade.

Mary Amiti, Oleg Itskhoki, Jozef Konings, 19 February 2013

Why is it that large movements in exchange rates have small effects on international prices? What does this mean for a crisis-stricken Eurozone? Using firm-level data, this column presents new research that investigates this exchange rate ‘disconnect’. Evidence suggests that the prices of the largest firms – with their disproportionately large share of trade – are insulated from exchange rate movements. The international competitiveness effects of a euro devaluation are therefore likely to be modest, given major exporters’ reliance on global supply chains.

Paolo Manasse, 17 January 2013

All G7 economies are struggling in the post-crisis climate, but US GDP has recovered to pre-crisis levels, while the Eurozone simply hasn’t. This column portrays the global crisis as a transitory shock for the US, but as a quasi-permanent shock for Europe. The policies that are needed get the Eurozone back on track do not seem to be politically feasible. As tension rises with every quarter of stagnation, prospects for the survival of the euro are not only not improving, they are actually getting worse.

Felix Roth, Lars Jonung, Felicitas Nowak-Lehmann, 05 November 2012

The Eurozone crisis has meant slow growth, rising unemployment, and social unrest. This column gauges the impact of all this on European citizens‘ opinions about the euro and EU institutions. Using Eurobarometer surveys, the authors find that, within the Eurozone, the crisis has only marginally lowered support for the euro but has led to a sharp fall in public trust in the ECB.

Daniel Gros, 19 December 2011

If Italy is too big to fail and too big to save, how can it save itself? This column suggests a survival strategy. The Italian households should finance their own government by buying its debt, and the ECB should prevent a collapse of the Italian banking system.

Britta Kuhn, 24 September 2011

Another week, another set of crisis talks over the future of the euro. This column argues that the currency’s problem is one of incentives. It says that interventions since early 2010 have been completely ineffective and that most current proposals to foster budget discipline will fare no better. It calls for new decision-making mechanisms as a matter of urgency.

Marco Pagano, 15 May 2010

The Eurozone has been swept up in turmoil that has ranged from stock and bond markets to exchange rates, government spending, and tax rates. Marco Pagano, Professor at the University of Naples Federico II and CEPR Research Fellow, explains events, how they hang together, and what needs to be done. This challenge facing Europe could be a historical turning point.

Gilles Saint-Paul, 05 May 2010

As world markets continue to raise concerns about Eurozone countries, this column argues that the euro has been a failure. Why should money be poured into Greece to "save the euro"? Besides the moral hazard effects of the intervention, it makes little sense to prolong a monetary regime which is actually one of the reasons why these Eurozone countries are in trouble.

Linda Goldberg, 31 March 2010

Is the dollar still the dominant international currency? This column argues that the answer is “yes”. The dollar is used as a major form of cash currency, and is the main currency for exchange rate pegs and for invoicing foreign transactions. Network externalities create inertia – everyone uses the dollar because everyone else is using the dollar.

Rebecca Hellerstein, William Ryan, 06 February 2010

Will the dollar lose its dominant role in international transactions? This column argues that this will happen quite slowly, if at all. It presents new evidence that in developing economies, demand for dollars hinges much more on historical factors than on recent experience. The highest inflation rate recorded within a country over the past 30 years explains flows of cash dollars more compellingly than recent inflation rates.

Zsolt Darvas, 23 July 2009

The crisis has revealed the serious asymmetry of unpunished fiscal profligacy in euro-area member countries and painful austerity in euro-area applicant countries. This column argues that the stakes are now very high and euro-area members ought to change the entry criteria to make them more reasonable.

Anton Brender, Emile Gagna, Florence Pisani, 21 July 2009

The crisis has broken the close correlation between differences in expected interest rates and the euro-dollar exchange rate. This column attributes that to the sharp increase in risk aversion triggered by the collapse of Lehman Brothers. It argues that fluctuations in risk aversion explain the path followed by the euro-dollar exchange rate since the beginning of the financial crisis.

Marco Buti, István Székely, Filip Keereman, 20 June 2009

This column says that the enlargement of the EU from 15 to 27 members made the EU more competitive and it is therefore better placed to face the current crisis. It says that both old and new member states enjoyed major benefits from eliminating trade barriers, gradually allowing higher cross-border labour mobility, promoting financial integration, strengthening institutions, and significantly reducing political risk.

Elias Papaioannou, Sebnem Kalemli-Ozcan, José-Luis Peydró, 20 June 2009

What was the payoff to adopting the euro? This column says that financial integration, measured as bilateral bank holdings and transactions, increased by 40% more amongst eurozone members than countries that stayed out. It attributes that growth to the euro’s introduction eliminating exchange rate risk and coinciding with financial regulatory harmonisation.

Gianmarco Ottaviano, Filippo di Mauro, Daria Taglioni, 10 March 2009

This column analyses the impact of the euro’s adoption upon European firm’s productivity and international competitiveness. The euro produced significant competitiveness gains for relatively small economies such as Finland, Belgium, and Austria. If Denmark and Sweden had joined the euro area in recent years, they would have enjoyed gains equivalent to a 5% across-the-board reduction in trade frictions.

Martin Feldstein, 26 January 2009

This column presents Marty Feldstein’s views on the euro. He suggests that tough economic conditions in Europe may cause substantial economic policy disagreements among the Eurozone countries and that one or more countries might actually withdraw from the Eurozone.

Zsolt Darvas, Jean Pisani-Ferry, 23 January 2009

The financial crisis is now hitting several of the non-euro-area new member states hard, highlighting the shortcomings of Europe’s monetary architecture. Crisis management in the euro area has had the unintended consequence of putting non euro-area new member states at disadvantage. Without decisive action, a new political and economic divide within Europe may emerge.

Jeffrey Frankel, 24 December 2008

Trade among euro members has increased 10-15% since the introduction of the euro, a far smaller effect than estimated prior to the currency's introduction. What explains the discrepancy between the European experience and previous history? This column explores the difficulty of explaining the difference.

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