INTERNATIONAL ECONOMICS

Euronomics

Daniel Gros

Is some form of common European economic government inevitable? Is enlargement of the eurozone still on the cards, or will the number of countries using the euro remain static – or perhaps even contract? Can the European Union ever resolve its internal economic imbalances? Are some banks not only too big, but also too interconnected, to fail?

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FEATURED COMMENTARIES

Austerity under Attack

Daniel Gros Series: Euronomics

2012-02-03

As the European economy risks falling into recession, many observers are asking whether austerity could lead to such a sharp decline in economic activity that revenues fall and the fiscal position actually deteriorates further. But it would be dangerous for the eurozone’s highly indebted countries to abandon austerity now.... read

Comments: 17 Recommended: 0 Read: 12733

The Decline and Fall of the Euro?

Daniel Gros Series: Euronomics

2012-01-03

Great empires rarely succumb to outside attacks. But they often crumble under the weight of internal dissent – a vulnerability that seems to apply to the eurozone as well.... read

Comments: 7 Recommended: 0 Read: 20918

Europe, Heal Thyself

Daniel Gros Series: Euronomics

2011-12-07

Despite sufficient economic resources, EU leaders have failed to come up with a solution to the eurozone debt crisis and are now seeking external aid. But Europe’s policymakers cannot offshore a problem that Europeans can and must address by themselves.... read

Comments: 1 Recommended: 1 Read: 12452

The Revolt of the Debtors

Daniel Gros Series: Euronomics

2011-11-03

Greek Prime Minister George Papandreou’s call for a referendum on the rescue package agreed at the eurozone summit in October has profound implications for European governance and the euro's future. Financial markets have reacted so strongly because investors now comprehend that “sovereign debt” is the debt of a sovereign that can simply decide not to pay.... read

Comments: 2 Recommended: 1 Read: 19905

The ECB’s Risky Business

Daniel Gros Series: Euronomics

2011-11-02

A central bank always has a crucial role to play in a financial crisis. But the ECB’s role within the eurozone nowadays is even more “central” than that of the Federal Reserve or the Bank of England, because it has been forced to substitute for the cross-border interbank market.... read

Comments: 0 Recommended: 0 Read: 11032

A Liquid Europe

Daniel Gros Series: Euronomics

2011-10-05

The eurozone might just be stepping back from the brink – that is, if a new framework to resolve the ongoing sovereign-debt crisis includes liquidity support for solvent governments. If investors knew that a liquidity squeeze was no longer possible, they would refrain from speculative attacks on such governments' bonds.... read

Comments: 8 Recommended: 1 Read: 16132

The Saver’s Dilemma

Daniel Gros Series: Euronomics

2011-09-06

Interest rates are now close to zero throughout the developed world, but the global economy is slowing down, and financial markets went into a tailspin during the summer. The fundamental problem is simple: the market cannot be brought back into equilibrium when savers do not want to lend to those who would be willing to take these savings.... read

Comments: 3 Recommended: 0 Read: 12539

From Pain to Gain on the EU Frontier

Daniel Gros Series: Euronomics

2011-08-05

Governments in the eurozone’s periphery, including Spain and Italy, now face a dilemma: they must undertake structural reforms to increase their long-term potential growth, but at the cost of even greater short-term pain. The debt crisis will end only when they have shown that they have understood this and accepted the inevitable sacrifices.... read

Comments: 2 Recommended: 1 Read: 13965

A Tale of Two Defaults

Daniel Gros Series: Euronomics

2011-07-07

Karl Marx famously wrote that history repeats itself as farce. In the case of Greece, history looks more like a much larger version of Argentina’s tragedy.... read

Comments: 2 Recommended: 0 Read: 19261

The EU’s Rules to Default By	Daniel Gros
Greece’s troubles with its ballooning public debt are again throwing Europe’s financial markets into turmoil, because the entire regulatory framework for the financial system was built on the assumption that government debt is risk-free. We now know that it is not, though EU regulators are still encouraging banks to take on as much of it as they want.... read

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What Size is the Fire Exit?

Daniel Gros Series: Euronomics

2010-12-03

The situation in the eurozone for investors today resembles that of a crowded cinema with only one exit: everyone knows that in case of fire, only the first to leave will be safe. So, depending on the size of the exit, even the faintest whiff of smoke can trigger a stampede.... read

Comments: 2 Recommended: 0 Read: 22601

The Skills Deficit

Daniel Gros Series: Euronomics

2010-09-03

The slowdown in the pace of economic recovery, particularly in the US, has predictably led to calls for further fiscal and monetary stimulus. But economic policy can do little more than ease the social pain of the long and difficult structural adjustment that countries like the US face as they try to re-establish the skills needed to strengthen exports.... read

Comments: 3 Recommended: 2 Read: 29905

The Skills Deficit

Daniel Gros Series: Euronomics

2010-09-03

Comments: 3 Recommended: 2 Read: 29905

Europe’s Competitiveness Obsession

Daniel Gros Series: Euronomics

2010-06-04

The EU is now obsessed with closing the competitiveness gap that has emerged between eurozone countries. But this approach risks leading in the wrong direction, because competitiveness is a relative concept: restoring competitiveness in some countries, such as Greece and Spain, would require others (Germany in the first instance) to accept deterioration in theirs.... read

Comments: 2 Recommended: 0 Read: 26247

The Cost of America’s Free Lunch

Daniel Gros Series: Euronomics

2010-11-03

For decades, the world has complained that the dollar’s role as global reserve currency has given the US guaranteed access to cheap money. But there is no free lunch; the US must choose between job creation, which requires a more competitive exchange rate, and cheap financing of its external and fiscal deficits.... read

Comments: 1 Recommended: 0 Read: 24845

Europe’s Banks, Europe’s crisis

Daniel Gros Series: Euronomics

2010-07-07

Europe’s policy makers have let themselves been misled by politically convenient views of the crisis, first believing that all problems came from the US, and now blaming reckless fiscal policy by the eurozone's southern members. But the real problem is the EU's weakly capitalized banks, which are so interconnected that problems in one country quickly jeopardize the entire system. ... read

Comments: 2 Recommended: 0 Read: 24817

Adjust and Reschedule or Delay and Default

Daniel Gros Series: Euronomics

2010-04-23

Unless Greece reschedules its massive debt, it is unlikely to be able to roll over the approximately €30 billion maturing annually for the next few years. But if Greece reschedules its debt in the absence of a credible fiscal-adjustment program, financial markets would view the delay as merely a prelude to eventual default, which would drive the risk premium on Greek debt even higher.... read

Comments: 3 Recommended: 0 Read: 24473

Are the Barbarians at the EU Gates?

Daniel Gros Series: Euronomics

2010-05-20

The Greek crisis poses an almost existential challenge – and has required such huge sums – because it poses the key question of European governance: can a member state of the EU be allowed to fail? As long as EU leaders cannot answer that question, financial markets will continue to harbor doubts about the euro’s long-term stability.... read

Comments: 3 Recommended: 1 Read: 23751

King Coal’s Pyrrhic Victory

Daniel Gros Series: Euronomics

2010-08-04

Sometimes the most important news is what is not happening. This summer has gives us one such example: the climate-change bill, for which President Barack Obama had pushed so hard, will not even be presented to the United States Senate, because it stands no chance of passage.... read

Comments: 1 Recommended: 0 Read: 23099

What Size is the Fire Exit?	Daniel Gros
The situation in the eurozone for investors today resembles that of a crowded cinema with only one exit: everyone knows that in case of fire, only the first to leave will be safe. So, depending on the size of the exit, even the faintest whiff of smoke can trigger a stampede.... read
The Decline and Fall of the Euro?	Daniel Gros
Great empires rarely succumb to outside attacks. But they often crumble under the weight of internal dissent – a vulnerability that seems to apply to the eurozone as well.... read

AUTHOR INFO

Daniel Gros

Daniel Gros is Director of the Center for European Policy Studies.

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