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The Eurozone in the Current Crisis

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  • Charles Wyplosz

    (Asian Development Bank Institute)

Abstract

This paper contrasts the United States (US) and European situations during the crisis and examines how much of the crisis has been imported by Europe from the US. The paper argues that Europe never had a chance to avoid contagion from the US. It also documents the relatively limited reaction of both monetary and fiscal authorities. Muted fiscal policy actions may well be a consequence of the Stability and Growth Pact despite its having been de facto suspended. While the European Central Bank (ECB) intervened promptly and massively to attempt to maintain liquidity in the money market, it has been slow in dealing with the upcoming recession. The concluding remarks consider the differences that the monetary union has made and their relevance.

Suggested Citation

  • Charles Wyplosz, 2010. "The Eurozone in the Current Crisis," Finance Working Papers 22825, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:financ:22825
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    File URL: http://www.eaber.org/node/22825
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    References listed on IDEAS

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    1. Brian M. Doyle & Jon Faust, 2005. "Breaks in the Variability and Comovement of G-7 Economic Growth," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 721-740, November.
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    5. Bosworth, Barry & Flaaen, Aaron, 2009. "America's Financial Crisis: The End of an Era," ADBI Working Papers 142, Asian Development Bank Institute.
    6. Jordi Galí & Roberto Perotti, 2003. "Fiscal policy and monetary integration in Europe [‘Consumption smoothing through fiscal policy in OECD and EU countries’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 18(37), pages 533-572.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Valerio Filoso, Valerio & Panico, Carlo & Papagni, Erasmo & Francesco, Purificato & Vázquez Suarez, Marta, 2016. "Causes and timing of the European debt crisis: An econometric evaluation," MPRA Paper 75847, University Library of Munich, Germany.
    2. Beniamino Moro, 2013. "The Run On Repo and the Liquidity Shortage Problems of the Current Global Financial Crisis: Europe vs. The US," Ekonomi-tek - International Economics Journal, Turkish Economic Association, vol. 2(1), pages 41-77, January.
    3. Mező, Júlia & Udvari, Beáta, 2012. "Effects of the debt crisis on the EU-China relations," MPRA Paper 40367, University Library of Munich, Germany.
    4. repec:cnb:ocpubv:as15 is not listed on IDEAS
    5. Liliana SIMIONESCU & Dalina DUMITRESCU, 2014. "Corporate Social Responsibility And Financial Crisis," Journal of Public Administration, Finance and Law, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 0(Special i), pages 31-37, September.
    6. Carlo Panico & Francesco Purificato, 2012. "The Role of Institutional and Political Factors in the European Debt Crisis," Working Papers wp280, Political Economy Research Institute, University of Massachusetts at Amherst.
    7. Pavla Bednářová, 2011. "The Fiscal Position of Eurozone Countries under the influence of the global economic crisis [Fiskální pozice zemí eurozóny pod vlivem světové hospodářské krize]," Současná Evropa, Prague University of Economics and Business, vol. 2011(1), pages 17-31.
    8. Santiago Capraro & Carlo Panico & Ignacio Perrotini & Francesco Purificato, 2012. "Austerit? o politiche coordinate ed espansive? Le difficili scelte delle autorit? europee," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2012(108), pages 81-112.

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    More about this item

    Keywords

    US; Europe; financial crisis; Fiscal Policy; European Central Bank;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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