The Effects Of The Crisis On The Convergence Divergence In The Euro Area
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Economic Convergence in the Euro Area: Coming Together or Drifting Apart?
| Author | : Mr.Jeffrey R. Franks |
| Publisher | : International Monetary Fund |
| Total Pages | : 47 |
| Release | : 2018-01-23 |
| Genre | : Business & Economics |
| ISBN | : 1484338499 |
We examine economic convergence among euro area countries on multiple dimensions. While there was nominal convergence of inflation and interest rates, real convergence of per capita income levels has not occurred among the original euro area members since the advent of the common currency. Income convergence stagnated in the early years of the common currency and has reversed in the wake of the global economic crisis. New euro area members, in contrast, have seen real income convergence. Business cycles became more synchronized, but the amplitude of those cycles diverged. Financial cycles showed a similar pattern: sychronizing more over time, but with divergent amplitudes. Income convergence requires reforms boosting productivity growth in lagging countries, while cyclical and financial convergence can be enhanced by measures to improve national and euro area fiscal policies, together with steps to deepen the single market.
Crisis of the Euro Zone as a Core-Periphery Problem
| Author | : Dominik Petko |
| Publisher | : LAP Lambert Academic Publishing |
| Total Pages | : 112 |
| Release | : 2014-10 |
| Genre | : |
| ISBN | : 9783659609350 |
There have been innumerable and fierce discussions on euro, in press, TV and also in academic literature. However, the readers are often misled by biased attitudes that lack sound analytical background. It is vital to apply a sophisticated economic model to discover the true effects of euro on member states. This study should be of interest to anybody who would like to learn about the macroeconomic mechanisms and causes of the euro zone periphery crisis. By comparing the convergence effects on PIIGS and the Central and East European countries, it shows that some countries should not have adopted euro and preserved national currencies instead. The Czech Republic serves as a case study of a successful exchange-rate converging economy. Nevertheless, the proposed solution traces parallels to the USA and envisages further fiscal unionisation of the EU. This work was written in close cooperation with Professor Martin Mandel, former advisor to the vice-president of the Czech National Bank and one of the most important experts on monetary economics.
Rising Powers and Economic Crisis in the Euro Area
| Author | : Ferdi De Ville |
| Publisher | : Springer |
| Total Pages | : 166 |
| Release | : 2016-06-15 |
| Genre | : Political Science |
| ISBN | : 113751440X |
In this book, Ferdi De Ville and Mattias Vermeiren examine the linkages between the economic crisis in the euro area and the rise of Brazil, India and China (BICs) in the global monetary and trading system. Drawing on the insights of the comparative capitalism literature, the authors show that the latter development has been a key source of the escalation of trade imbalances in the euro area, which are widely seen as an important cause of the financial and economic crisis in the region. By pointing to the external source of these imbalances and the divergent institutional capacity of the euro area countries to deal with the intensified competition associated with the rise of the BICs, De Ville and Vermeiren go beyond the focus on the divergence in unit labor costs as the driving force of these imbalances. As such, this book provides a comprehensive policy critique of the EU’s export-led growth strategy based on declining unit labor costs.
One Currency, Two Europes: Towards A Dual Eurozone
| Author | : Bruno Dallago |
| Publisher | : World Scientific |
| Total Pages | : 649 |
| Release | : 2016-05-24 |
| Genre | : Business & Economics |
| ISBN | : 9814759031 |
The aftermath of the US subprime mortgage crisis in 2008 saw its influence spread around the world, including Europe. The European crisis turned out to be longer, deeper and more resilient than anticipated. An unexpected consequence was the increasingly divergent economic and financial situation of two main groups of countries within the Eurozone, which includes the countries that adopt the euro as their common currency. The divergence was caused by a number of factors, fundamentally stemming from the dissimilar economic and financial situation of its member countries and from the incomplete institutional architecture and the monetary and fiscal policies in the Eurozone.One Currency, Two Europes: Towards a Dual Eurozone seeks to explore these factors which give rise to the Eurozone's asymmetric composition and the growing difficulties and ineffectiveness that policies meet. It presents evidence to show how the presently incomplete institutional architecture of the Eurozone is the main reason for the extreme detrimental effects of the international crisis and austerity policies, along with the asymmetric economic situation and the insufficient mutual trust demonstrated by the vulnerable as well as resilient countries.Other than presenting a complete overview and analysis of the events that unfolded in the Eurozone as a result of the financial crisis that first emerged in the US, this book also suggests possible solutions which could help to reunify the Eurozone, and make the common currency sustainable and beneficial for all member countries. One Currency, Two Europes will be useful for policymakers who want to learn from the Eurozone's experience with the financial crisis and the importance of complete institutional architectures and inter-country economic convergence. It will also serve as a reference to students and researchers who would like more in-depth analysis of the crisis and the Eurozone's fiscal, monetary and institutional past, present, and future.
Crisis in the European Monetary Union
| Author | : Giuseppe Celi |
| Publisher | : Routledge |
| Total Pages | : 414 |
| Release | : 2017-12-22 |
| Genre | : Business & Economics |
| ISBN | : 1134867603 |
After decades of economic integration and EU enlargement, the economic geography of Europe has shifted, with new peripheries emerging and the core showing signs of fragmentation. This book examines the paths of the core and peripheral countries, with a focus on their diverse productive capabilities and their interdependence. Crisis in the European Monetary Union: A Core-Periphery Perspective provides a new framework for analysing the economic crisis that has shaken the Eurozone countries. Its analysis goes beyond the short-term, to study the medium and long-term relations between ‘core’ countries (particularly Germany) and Southern European ‘peripheral’ countries. The authors argue that long-term sustainability means assigning the state a key role in guiding investment, which in turn implies industrial policies geared towards diversifying, innovating and strengthening the economic structures of peripheral countries to help them thrive. Offering a fresh angle on the European crisis, this volume will appeal to students, academics and policymakers interested in the past, present and future construction of Europe.
Towards Convergence in Europe
| Author | : Daniel Vaughan-Whitehead |
| Publisher | : Edward Elgar Publishing |
| Total Pages | : 512 |
| Release | : 2019 |
| Genre | : Convergence |
| ISBN | : 1788978072 |
This book aims to answer a number of important questions. To what extent have European countries converged or diverged with EU-wide economic and social indicators over the past 20 years? What have been the drivers of convergence? Why do some countries lag behind, while others experience continuous upward convergence? Why are these trajectories not always linear? Particular attention is paid to the role of institutions, actors and industrial relations – focusing on the resources and strategies of governments, employers and trade unions – in nudging EU countries onto an upward convergence path.
'The Convergence Illusion'
| Author | : Angelo Arcelli |
| Publisher | : |
| Total Pages | : 24 |
| Release | : 2015 |
| Genre | : |
| ISBN | : |
The crisis of sovereign debt in Europe revealed the limits and anomalies of the Euro, the common currency for 17 European Union member states, which participate in the EU common market but are denied independent monetary policies, even during a period of severe economic contraction and illiquidity. Such rigidity has had some perverse effects, such as, in the wake of divergent pressure on interest rates, that capital flight from weak to strong countries, exacerbating political differences within the EU, even to the point of calling the Union's continued existence into question.The solution to the sovereign debt crisis and the restoration of confidence in the European project are critical for the long term stability and economic growth of the region, and for the stability of worldwide financial market. But such a solution lies not only in Eurozone members' hands, rather, particularly in this moment, in US possible support and long term strategy. The opening to a renewed Transatlantic bond, eventually extended to a broader common market or at least a trade agreement, jointly with a clear path to a growing political integration of Europe may be the ways for solving credibly all market doubts on the future of Euro and the stability of financial markets.Reversing the most serious adverse trends - as opposed to temporizing with 'crisis response' - requires a thorough understanding of the origins of the crisis and the continuing efforts to contain it, in Greece, including the prospects for stemming contagion to Spain and Italy. This paper explores those issues and, as well, the continuing political difficulties that plague European policy making. The implications for the US economy and global financial stability of continuing failure by Europe to confront difficult truths - and to take concerted action - are enormous.
From Convergence to Crisis
| Author | : Alison Johnston |
| Publisher | : Cornell University Press |
| Total Pages | : 244 |
| Release | : 2016-05-19 |
| Genre | : Political Science |
| ISBN | : 1501703773 |
What explains Eurozone member-states' divergent exposure to Europe’s sovereign debt crisis? Deviating from current fiscal and financial views, From Convergence to Crisis focuses on labor markets in a narrative that distinguishes the winners from the losers in the euro crisis. Alison Johnston argues that Europe’s monetary union was structured in a way that advantaged the corporatist labor markets of its northern economies in external trade and financial lending. Northern Europe’s distinct economic advantage lay not with its fiscal capabilities, which were not that different from those of southern Eurozone countries, but with its wage-setting institutions. Through highly coordinated collective bargaining, the euro North persistently undercut the inflation performance of southern trading partners, destining them to a perpetual cycle of competitive decline and external borrowing. While northern Europe’s corporatist labor markets were always low inflation performers, monetary union ultimately made their wage-setting institutions toxic for the South. The euro’s institutional predecessor, the European Monetary System, included economic and institutional mechanisms that facilitated macroeconomic adjustment and convergence between the common currency’s corporatist and noncorporatist economies. Combining cross-national statistical analysis with detailed qualitative case studies of Denmark, Germany, Italy, Ireland, the Netherlands, and Spain, Johnston reveals that monetary union’s removal of these mechanisms allowed external imbalances between these two blocs to grow unchecked, underpinning the crisis in which Europe currently finds itself. Rather than achieving the EU’s goal of an ever-closer union, the common currency produced a monetary environment that destabilized the economic integration of its diverse labor markets.
Europe and the Euro
| Author | : Alberto Alesina |
| Publisher | : University of Chicago Press |
| Total Pages | : 477 |
| Release | : 2010-04-15 |
| Genre | : Business & Economics |
| ISBN | : 0226012859 |
It is rare for countries to give up their currencies and thus their ability to influence such critical aspects of their economies as interest and exchange rates. Yet ten years ago a number of European countries did exactly that when they adopted the euro. Despite some dissent, there were a number of arguments in favor of this policy change: it would facilitate exchange of goods, money, and people by decreasing costs; it would increase trade; and it would enhance efficiency and competitiveness at the international level. A decade is an ideal time frame over which to evaluate the success of the euro and whether it has lived up to expectations. To that aim, Europe and the Euro looks at a number of important issues, including the effects of the euro on reform of goods and labor markets; its influence on business cycles and trade among members; and whether the single currency has induced convergence or divergence in the economic performance of member countries. While adoption of the euro may not have met the expectations of its most optimistic proponents, the benefits have been many, and there is reason to believe that the euro is robust enough to survive recent economic shocks. This volume is an essential reference on the first ten years of the euro and the workings of a monetary union.
