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Begin New Search Topic Regional Cooperation Author Paul De Grauwe

1. What Germany should fear most is its own fear: An analysis of Target2 and current account imbalances

Author:
Paul De Grauwe and Yuemei Ji
Publication Date:
09-2012
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
This paper analyzes two claims that have been made about the Target2 payment system. The first one is that this system has been used to support unsustainable current account deficits of Southern European countries. The second one is that the large accumulation of Target2 claims by the Bundesbank represents an unacceptable risk for Germany if the eurozone were to break up. We argue that these claims are unfounded. They also lead to unnecessary fears in Germany that make a solution of the eurozone crisis more difficult. Ultimately, this fear increases the risk of a break-up of the eurozone. Or to paraphrase Franklin Roosevelt, what Germany should fear most is simply its own fear.
Topic:
Economics, Regional Cooperation, Monetary Policy, and Financial Crisis
Political Geography:
Europe and Germany

2. In Search of Symmetry in the Eurozone

Author:
Paul De Grauwe
Publication Date:
05-2012
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
One of the major problems of the eurozone is the divergence of the competitive positions that have built up since the early 2000s. This divergence has led to major imbalances in the eurozone where the countries that have seen their competitive positions deteriorate (mainly the so - called ' PIIGS ' – Portugal, Ireland, Italy, Greece and Spain ) have accumulated large current account deficits and thus external indebtedness, matched by current account surpluses of the countries that have improved their competitive positions (mainly Germany).
Topic:
Economics, Markets, Regional Cooperation, Global Recession, and Financial Crisis
Political Geography:
Europe, Greece, Germany, Spain, Italy, Portugal, and Ireland

3. Governance of a Fragile Eurozone

Author:
Paul De Grauwe
Publication Date:
05-2011
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
When entering a monetary union, member countries change the nature of their sovereign debt in a fundamental way, i.e. they cease to have control over the currency in which their debt is issued. As a result, financial markets can force these countries' sovereigns into default. In this sense, the status of member countries of a monetary union is downgraded to that of an emerging economy. This makes the monetary union fragile and vulnerable to changing market sentiments. It also makes it possible that self-fulfilling multiple equilibria arise.
Topic:
Debt, Markets, Regional Cooperation, and Financial Crisis
Political Geography:
Europe

4. Only a more active ECB can solve the euro crisis

Author:
Paul De Grauwe
Publication Date:
08-2011
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
The biggest threat for the eurozone is the contagion of the Greek sovereign debt crisis to the rest of the system. If the Greek crisis could be isolated, it would barely matter for the eurozone as a whole. After countless crisis meetings of the European Council, however, it has to be admitted that the European leaders have failed to isolate the Greek crisis and to stop the forces of contagion. The latest meeting of the heads of state or government of the euro area on July 21st is no exception.
Topic:
Debt, Markets, Regional Cooperation, and Financial Crisis
Political Geography:
Europe

5. What kind of governance for the eurozone?

Author:
Paul De Grauwe
Publication Date:
09-2010
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
The survival of the eurozone hinges on the capacity of its leaders to improve its governance. This has become very clear since the eruption of the government debt crisis in the eurozone in 2009, which can be said to result from a failure of economic governance. In order to answer the question of how the economic governance of the eurozone should be reformed, we should first make a diagnosis of the crisis in which the eurozone has been mired since 2009.
Topic:
Economics, Regional Cooperation, and Governance
Political Geography:
Europe