The Euro at 20: Still a Project Projected to Fail?

Intereconomics - Since growth and employment are the economic variables dominating the public debate in an era of low inflation, it is no surprise that, that the euro has become a matter of...     

Correction: The Euro at 20: Still a Project Projected to Fail?

Intereconomics - In the Forum article “The Euro at 20: Still a Project Projected to Fail?” by Adalbert Winkler in Intereconomics, Vol. 54, No. 2, 2019, p. 90–95, DOI:...     

The Accounting Court: Some Speculations on Why Not?

The accounting court proposed by Spacek (Account Rev 33(3):368, 1958) was a potent and controversial idea. The court would provide a venue to which auditing firms and clients could bring disputes over the application of accounting principles and over time would build a database of casework illustrating the court’s decisions on proper application and interpretation of accounting principles. In this paper, we contribute to the literature on the accounting court and on standard setting by analyzing group value orientations and motivations that should promote the likelihood of an accounting court appearing in these times. We base our analysis in value group theory (Shakun 1988 Evolutionary systems design: policymaking under complexity and group group decision support systems. Holden-Day, Oakland, CA.), an analysis rooted in an examination of operational and terminal values of key participants. The analysis brings to light a contradiction between the terminal values of the key players and the actions of those players. We argue that common conditions of existence came between the operational goals and terminal values in the accounting domain and key actors willingness to seek the specified values. This analysis provides a flexible but powerful tool for analyzing motivations that may influence behavior of key organizations in the accounting domain.     

The “New Economic Reality”: How New and How Real?

Is there a “new economic reality” as the United States gradually emerges from the Great Recession? It appears that some major new forces are indeed likely to persist and must be taken into account in public policy and business planning. Others may or may not be transitory. Still other major factors, both good and bad, are not new but are likely to persist for the foreseeable future. This NABE presidential address describes the factors that are likely to have the most influence on the U.S. economic future and the implications that they have for economists in contributing to productive analysis and debate.     

Can the Euro Survive?

One of the fascinating aspects of the European debt crisis has been the resilience of the euro. For much of 2011, the euro was a key reserve currency, oblivious to the chaos ravaging European economies. Now, however, the gravity of the crisis is finally dragging down the euro. As the Euro zone debt crisis enters its third uncertain year, the question about whether the euro can survive rises. This paper argues that the euro can survive given policymakers still have in hand various tools. These tools include creating exit rules, implementing new stabilisation rules and instruments, adopting new fiscal policy, introducing conditional Eurobonds, using inflation differentials and providing more independence to the European Central Bank.     

Where Do Firms Export,How Much and Why?

The empirical finding that exporting firms are more productive on average than non‐exporters has provoked a large theoretical literature based on models such as Melitz ( 2003 ), where more productive firms are more likely to overcome costs associated with trade. This paper investigates how closely the productivity heterogeneity framework fits the data from a firm‐level survey that includes information on export destinations and firm characteristics such as productivity. We find a high degree of unpredictable idiosyncratic participation in export markets by firms and a relatively weak positive correlation between the extent of a firm's export market participation and its export sales. We find that a small number of standard gravity variables provide a close fit to the country‐level determinants of trade but that greater variation results in more difficulty in explaining firm‐specific factors driving exporting behaviour. We also illustrate some elements of the dynamics over time in firm exporting patterns by destination. We show that lagged exporting activity has a significant effect on a firm's current exporting profile.     

The Euro — A Tale of 20 Years: What Are the Priorities Going Forward?

Intereconomics - First, we need to recall the initial objectives set for the euro and how these have changed over time, notably due to the weaknesses that came to the fore throughout the recent...     

The Euro Area in Between Crises? Considerations on Fiscal Policies and Rules

Intereconomics - Credibility of the revised fiscal rules will be crucial so that vulnerable countries can benefit from confidence effects. National ownership will be key in that respect and can be...     

Muss der Euro gerettet werden?

Bundeskanzlerin Angela Merkel sagte am 10. Mai, nachdem die EU-Finanzminister einen gigantischen Rettungsschirm für den Euro beschlossen hatten: „Wir schützen das Geld der Menschen in Deutschland.“ Die Datenlage zeigt allerdings nicht, dass der Euro tats?chlich in gro?er Gefahr war. Die Rettungsaktion hat vor allem den Gl?ubiger-Banken geholfen und belastet die Steuerzahler. Für die Zukunft w?re es besser, den Stabilit?ts- und Wachstumspakt zu st?rken, als einen Europ?ischen W?hrungsfonds zu gründen.     

How Can European uses and Consumers Have Confidence in the Euro? Six Socio-Economic Hypotheses

Chronologically speaking, greater European unity is being established through the introduction of a new monetary and financial instrument. However, this does not mean that the arrival of the euro should be seen as a merely technical operation.The phasing out of national currencies and the acceptance, both intellectual and pragmatic, of a common monetary unit shared by a number of different societies is no simple matter, even in times of peace. The identification and analysis of the major categories of obstacles encountered and of concerns voiced by different groups and populations should guide the different governments in their choice of policies to accompany the transfer to the euro, with attention focused on the most economically, socially or physically isolated individuals. By taking account of the psycho-sociological impact of this monetary changeover, the political authorities will ensure that the spheres of information, communication and "education" are not left entirely in the hands of the commercial and financial institutions.Each citizen will need to build up a feeling of trust with respect to the euro, to learn how to use this new monetary code by creating a new scale of prices and a new set of monetary references. The adaptation phase, whose length will vary for each individual and in each country, will need to be specifically adapted to suit particular national, regional and even local characteristics.     

Towards a New Euro Crisis?

Intereconomics - There is thus a fundamental credibility issue about the willingness of the ECB to be a lender of last resort in the government bond markets. This will continue to make the eurozone...     

Welcher Euro wird überleben?

Auf ihrem letzten Gipfeltreffen Ende M?rz haben die europ?ischen Staats- und Regierungschefs einen Europ?ischen Stabilisierungsmechanismus für die Zeit nach 2013, eine Sch?rfung des Stabilit?ts- und Wachstumspaktes und einen Euro-Pakt-Plus beschlossen. Dies soll dazu führen, dass die Wirtschaftspolitik der Eurol?nder besser koordiniert wird. Der Autor ist allerdings skeptisch, ob eine gelenkte Koordinierung die richtige Strategie ist. Für die L?sung der europ?ischen Probleme h?lt er den Marktmechanismus für geeigneter.     

Ist der Euro jetzt gerettet?

The paper analyses the German Federal Constitutional Court??s ruling on the ESM Treaty and the Fiscal Pact in the framework of the interim measures and provides an outlook on the decision in the main action. The material scope of the judgment and the standards of review are identified as well as the possible effects on the political scope of further euro bailout policy. The current crisis does not allow sufficient time for making the required changes to the EU treaties and to the German constitution. In view of the expected decision on the monetary policy strategy of the ECB, legal and economic aspects are considered, and the role of the central bank is critically reflected.     

Does a weak Euro signify poor competitiveness of the Euro zone?

The pronounced decline in the euro’s exchange rate since the currency’s launch at the start of 1999, especially against the US dollar, has rekindled the discussion surrounding the competitiveness of the euro zone. This marks quite a shift of focus within just a short period. When the new monetary union came into being, the emphasis was on the increased significance of the corresponding economic zone, given its economic muscle and its prominent position on world markets. This was taken to indicate that the EMU economies were highly competitive. On the other hand, the drop in the euro’s value since its launch is said by many to reflect a poor competitive position. This article will examine some possible explanations for the depreciation of the euro against the dollar, focussing on the competitiveness of the euro zone, particularly relative to the USA, by applying selected indicators.     

The Aftermath of a Currency Collapse: How Different are Emerging Markets?

In currency crises, unlike in orderly devaluations, the financial markets dominate events. Previous research has shown that the output effects of a crisis tend to be worse in emerging markets, and the current account adjustment greater. This paper examines the evolution of a wider range of macroeconomic variables from two years before a currency collapse to two years afterwards. On the basis of twelve recent episodes, it is shown that currency collapses (crises followed by depreciations) have had a much greater adverse impact in emerging markets (defined as relatively high‐income developing countries exposed to international capital markets) than in developed countries. There is greater nominal and real depreciation, a substantial inflation shock, a much bigger output effect, and far greater import compression, whilst inflows of portfolio capital virtually cease. These differences are statistically significant. Nevertheless there is wide variation n the post‐collapse experience of the six emerging markets studied (Mexico, Thailand, Korea, Indonesia, Russia and Brazil). Although all six experienced a sudden stop or even a reversal of capital flows and very sharp nominal depreciations, inflation remained low in Thailand, Korea and Brazil, and output losses were comparatively small in Russia and Brazil. Previous studies of individual crises suggest that important factors are the state of the banking system and its vulnerability to currency movements, the ability of the authorities to establish a credible macroeconomic policy after the collapse, and whether the crisis triggers significant political instability.