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Experts, Statistics, and the Future of the Eurozone

At this time of year, it’s common to personally reflect on where we are and where we are going. ‘Year in Review’ columns are traditional products of the commentariat. A fascinating study evaluating the progress that the Eurozone has made in resolving the economic crisis and moving toward a stronger currency union was recently published by the Brookings Institution. Below I discuss the methodology of the study and show how a simple measure in statistics known as the standard deviation can extend these findings, helping us think about where the Eurozone is headed in 2013 and beyond.

The Brookings Survey on Eurozone Progress framed progress in terms of six objectives:

• Building a political union
• Building a fiscal union
• Building a banking union
• Strengthening the role of the European Central Bank
• Strengthening crisis resolution tools
• Addressing the challenge of competitiveness and economic adjustment

Fourteen Brookings scholars evaluated how well the countries in the Eurozone have met these objectives by ranking them on a scale from zero to one hundred percent. This survey is the inaugural installment of what will be a quarterly effort.