The Crisis in the Euro Zone : Did the Euro Contribute to the Evolution of the Crisis?

Lin, Justin Yifu ; Treichel, Volker

World Bank, Washington, DC

关键词: ACCOUNTING;    ADVERSE SHOCKS;    AGGREGATE DEMAND;    AMOUNT OF CREDIT;    ANNUAL GROWTH;   

DOI  :  10.1596/1813-9450-6127
RP-ID  :  WPS6127

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The simmering sovereign debt crisis inthe Euro Zone represents a looming threat to the recovery ofthe world economy and could lead to a renewed globalfinancial crisis. The purpose of this paper is to analyzethe root causes of the crisis in Europe and assess theextent to which it was driven by the global financial crisisand by factors internal to Europe, notably the adoption ofthe common currency. Adoption of the euro led to convergenceof interest rates in periphery countries to the levels incore countries and, in combination with rising capitalinflows owing to greater financial integration, set off aconsumption and real estate boom in periphery countries,leading to higher growth and increases in government revenueand spending. The resulting real appreciation led to a lossof competitiveness in periphery countries, adverselyaffecting export performance and causing rising currentaccount imbalances. While the fiscal position remainedmanageable before the crisis owing to rising revenue, therecession brought about by the global financial crisis ledto the burst of real estate bubbles and a financial sectorcrisis and to sharply increased budget deficits and worseneddebt indicators and triggered the sovereign debt crisis.Core countries, in particular Germany, maintained acompetitive edge through wage restraint allowing them toincrease exports to periphery countries, while their banksprofited from increased lending to non-core countries. Insum, the euro exacerbated intra-European imbalances whoseunsustainability became evident in the aftermath of theglobal financial crisis and triggered the current sovereigndebt crisis.