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1005black Euro Crisis
1005black Euro Crisis
Stanley W. Black Lurcy Professor of Economics, Emeritus University of North Carolina at Chapel Hill May 7, 2010
http://mjperry.blogspot.com/2009/04/house-price-indexes-usa-vs-europe.html
Exchange Rates vs the Dmark or euro (Left Index: 1970q1 = 100 Right Index: 2007m1 = 100)
Source: International Financial Statistics, IMF, Monthly Bulletin, European Central Bank
Germany
100 95 90 85 80 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Economist.com
Conclusions
Cautious Eurozone response to Financial Crisis
Interest rate policy reaction delayed: concentration on inflation target Fiscal policy reaction muted: Stability & Growth Pact
Common currency members avoided large devaluations and foreign currency debt. European governments have tried to act together, not always successfully. Limited impact of falling exports due to extensive internal trade relationships. Greece facing difficult adjustment problems, European banks avoiding losses on Greek bonds.