Posted by hkarner - 28. September 2015
Gita Gopinath, Sebnem Kalemli-Ozcan, Loukas Karabarbounis, Carolina Villegas-Sanchez 28 September 2015, voxeu
Joining the Eurozone was once a near unquestionably good idea. Now, the costs of joining the monetary union are under close scrutiny. This column takes a slightly different tack, presenting an alternative perspective on how joining the euro has impacted productivity in southern Europe. It turns out that capital wasn’t allocated efficiently across firms after cheap borrowing at low interest rates, impacting total factor productivity.
The ongoing Greek debt crisis has renewed interest among economists and policymakers in understanding the costs associated with joining the Eurozone. It has also generated concerns that countries in Southern Europe could have been better off if they had never joined in the first place. Partly, these concerns arise from the fact that countries in the south were able to borrow at lower interest rates in the run up to and following the introduction of the euro. As creditors deemed these countries less risky than before and as the ECB strengthened its anti-inflationary policy, borrowing rates decreased and these economies experienced large inflows of capital (Feldstein 2012).
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Posted in Artikel | Verschlagwortet mit: Gopinath, Greece, Interest, Karabarbounis, PIIGS, Productivity | Leave a Comment »