College aantekeningen
EC104 notes: europe since 2001
- Vak
- Instelling
Revision notes with content from lectures and seminars for EC104 topic 17: Europe since 2001
[Meer zien]Voorbeeld 2 van de 6 pagina's
Voorbeeld 2 van de 6 pagina's
In winkelwagen
In winkelwagen
gesponsord bericht van onze partner
Verkoper
Volgen
bethwalton03
Ontvangen beoordelingen
Voorbeeld van de inhoud
Europe since 2001European integration since 2001
● Eichengreen and Bolitho (2010) - European economic integration post-1945
had several stages:
○ 1950 - European Payments Union
■ Committed countries to eliminate exchange rate controls
■ Overcame coordination problem where countries that liberalised
unilaterally faced balance of payment problems
○ 1951 - European Coal and Steel Community
■ Organisation of 6 countries based on supranationalism
■ Failed to create a single market, remove subsidies, tariffs and
cartel agreements
○ 1957 - European Economic Community / single market
■ Moved towards the removal of internal tariffs and creation of a
common external tariff
○ 1979-92 - European Monetary System
■ Agreement to limit relative fluctuations of EU currencies
■ Collapsed after Britain was forced out
○ 1993 - Single Market
■ 4 freedoms - movements of goods, people, capital, services
The European Monetary Union
● Eichengreen and Bolitho (2010) - EMU is “Europe’s most ambitious project
since the Treaty of Rome” (which created the EEC)
● Gave monetary policy to a supranational European central bank
○ Adopted a common currency - initially adopted by 11 countries (1999)
○ 2010 - 16 countries had adopted the Euro
● Growth contributions include greater confidence and investment, increased X-
efficiency and efficiency gains due to institutional reforms
○ Limited evidence
The Euro
● Lane (2006) - large inflation differentials between countries
○ 1.5% in Germany, 5.6% in Ireland
● Euro caused macro divergence
○ Relative decline in interest was bigger in peripheral countries (Greece)
- increase in lending and housing booms
■ Availability of cheap credit
○ Higher inflation countries should decrease competitiveness
■ Causes a boom-bust cycle
, ○ More open countries are more sensitive to policy actions by the ECB
● Could have also led to economic union:
○ Financial integration - interest rates converged
○ Trade integration - eliminated ER uncertainty
■ May have boosted trade by up to 15% in the Eurozone
○ Increased labour mobility
■ Culture / language / tax / pension schemes are still barriers
Fiscal policy
● Lane (2006) - Maastricht Treaty (1992) imposed guidelines saying budget
deficits < 3% and debt:GDP ratio < 60%
● 1998 Stability and Growth Pact limited deficits / debt
● 2001 - looser fiscal policy due to a slowdown
○ Countries could not use monetary policy
○ Caused problems as these countries did not previously have surpluses
○ France and Germany exceeded the 3%
○ Stability and Growth Pact suspended when EU finance ministers
refused to put them under surveillance - no real consequences to
increasing the deficit
● National fiscal policies are not coordinated
○ Aggregate response to a shock may not be optimal
● No federal fiscal system - no role for fiscal insurance across borders to slow
shocks
The Great Recession in Europe
Spain
● Eichengreen (2014) - 1997-2006, Spanish house prices rise by 175%
○ Irish house prices rise by 260%
○ Fuelled by a credit boom
● Eichengreen blames the Euro
○ Investors believed that poorer peripheral countries would be forced to
follow disciplined policies and would grow rapidly
○ Interest rates fell, creating incentive problems
● European banks financing inflows were highly leveraged
○ 20:1 ratio of assets:capital in Europe
● Banking systems were large and vulnerable to a liquidity crisis
○ 2007 - US subprime mortgage crisis began to hit Europe
● UK - Northern Rock expanded by borrowing
○ Extended mortgages to customers and re-selling them (securitisation)
○ Demand for securitised mortgages collapsed and NR had to ask the
Bank of England for support
Voordelen van het kopen van samenvattingen bij Stuvia op een rij:
Verzekerd van kwaliteit door reviews
Stuvia-klanten hebben meer dan 700.000 samenvattingen beoordeeld. Zo weet je zeker dat je de beste documenten koopt!
Snel en makkelijk kopen
Je betaalt supersnel en eenmalig met iDeal, creditcard of Stuvia-tegoed voor de samenvatting. Zonder lidmaatschap.
Focus op de essentie
Samenvattingen worden geschreven voor en door anderen. Daarom zijn de samenvattingen altijd betrouwbaar en actueel. Zo kom je snel tot de kern!
Veelgestelde vragen
Wat krijg ik als ik dit document koop?
Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.
Tevredenheidsgarantie: hoe werkt dat?
Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.
Van wie koop ik deze samenvatting?
Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper bethwalton03. Stuvia faciliteert de betaling aan de verkoper.
Zit ik meteen vast aan een abonnement?
Nee, je koopt alleen deze samenvatting voor €3,71. Je zit daarna nergens aan vast.
Is Stuvia te vertrouwen?
4,6 sterren op Google & Trustpilot (+1000 reviews)
Afgelopen 30 dagen zijn er 53068 samenvattingen verkocht
Opgericht in 2010, al 14 jaar dé plek om samenvattingen te kopen