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The Euro Crisis and Its Aftermath$
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Jean Pisani-Ferry

Print publication date: 2014

Print ISBN-13: 9780199993338

Published to Oxford Scholarship Online: May 2014

DOI: 10.1093/acprof:oso/9780199993338.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 23 April 2021

The Day the Euro Ceased Being Boring

The Day the Euro Ceased Being Boring

(p.3) Chapter 1 The Day the Euro Ceased Being Boring
The Euro Crisis and Its Aftermath

Jean Pisani-Ferry

Oxford University Press

During the first 10 years of its existence, from 1999 to 2008, the euro was boring. The transition from old national currencies had been smooth and trouble-free. Inflation was nonexistent and interest rates were low. Things began to change in 2009, when Greece’s fiscal woes came to the fore. The euro suddenly stopped being boring. To tell the truth, by the mid-2000s, it had already become evident that after the adoption of the euro, economies had begun to diverge rather than converge. While Germany was striving to cut costs and reinvent its industrial model, while such and Ireland and Spain were enjoying a period of euphoria and unprecedented prosperity. In these countries, the euro had triggered a decline in interest rates, reducing the burden of debt and opening the credit floodgates, while inflation consistently exceeded the euro-area average. There was not much the European Central Bank, the institution created to manage the new currency, could do, since its mandate was to manage the euro area as a whole, not the situations in individual countries.

Keywords:   euro, Greece, Spain, unemployment, Germany, interest rates, public debt, inflation, European Central Bank, euro crisis, competitiveness

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