The Euro was introduced in 1999. Criticisms of the Euro Project Include A fixed exchange rate can cause an imbalanced economy. Some countries in the Euro have become uncompetitive because of higher inflation. But, there is no devaluation to restore competitiveness. This has led to high current account deficits, low growth and high unemployment. No …
In 2009, US and EU unemployment rates both stood at 10% – but since then EU unemployment has increased to 12% and US unemployment fallen to 7.9%. (see: US v EU unemployment) These contrasting fortunes in unemployment are a reflection of diverging rates of economic growth. Whilst, Europe has entered a double dip recession, the …
Readers Question. Can you explain why the Government and Economic Commentators are talking about a multiplier (in relation to budget cuts) of between 0.5 and 1, whereas I always thought that the GDP multiplier was bigger than this. Just to summarise a multiplier of 0.5 would mean fiscal consolidation (spending cuts) of £1bn, would lead …
Recently, I was researching a post on US v EU unemployment. No.1 on Google (a news result) was a post with some observations on EU vs US economic policy. This paragraph caught my attention …But many European countries have completely mismanaged their budgets for continued government stimulus, which lends to the argument of free market …
The fiscal multiplier looks at how much an initial change in injections affects real GDP. For example, if increased government spending of £1bn causes overall GDP to rise by £1.5bn, the multiplier effect is 1.5 If £1bn worth of tax rises causes real GDP to fall by £0.5bn, the multiplier effect is (0.5) Since 2009, …
The purpose of harmonised competitive indicators is to show changes in relative competitiveness of countries. They are are also consistent with the real effective exchange rates (EERs) of the euro. This shows the divergence in competitiveness between a country like Germany De (improved competitiveness) and other countries like Greece and Ireland which have seen higher …
Interesting perspective from Norbert Walter a former chief economist of Deutsche Bank Group and head of Deutsche Bank Research. – What Euro Crisis? Basically, his view; There isn’t really an economic crisis in the Eurozone If there is a crisis, it could easily be resolved through a bit more immigration and the European Union becoming like …
Readers Question: What policies could Germany / the EU use to help save the Euro? The Euro has many problems. The most obvious outer problem is rising bond yields and the threat of sovereign debt default. Related to sovereign debt default is a banking default, e.g. from Spanish banks which would cause knock-on effects. But, …