Challenge of Europe

Optimal Currency Areas and Governance: The Challenge of Europe

Sunday, April 10, 2011

Moderator:  Andre Sapir - Professor of Economics, Université Libre de Bruxelles 

Panelists:
Carl-Ludwig Holtfrerich - Professor of Economics and Economic History, Freie Universitat Berlin
Kevin O'Rourke - Professor of Economics, Trinity College (Dublin)
Jean Pisani-Ferry - Director, Bruegel, Brussels
Niels Thygesen - Emeritus Professor of International Economics, University of Copenhagen

Discussants:   
Wendy Carlin - Professor of Economics, University College London
Jeffrey Frankel - Professor of Capital Formation and Growth, Kennedy School of Government, Harvard University
Joseph Halevi - Professor of Political Economy, University of Sydney
Wolfgang Munchau - Eurointelligence ASBL

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Carl-Ludwig Holtfrerich compares the current Euro crisis with the US debt crisis in the 1840s, when the US had a common currency and a fully-fledged central government, and nine out of 27 US states defaulted. That crisis, he says, did not endanger the US dollar then, just as the current crisis does not endanger the euro now.

Carl-Ludwig Holtfrerich is a Professor of Economics and Economic History at the Freie Universitat Berlin. He is speaking in the panel "Optimal Currency Areas and Governance: The Challenge of Europe" at the Bretton Woods Conference on April 10, 2011.

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Kevin O’Rourke describes a political trilemma in Europe. He says that if the nation state remains dominant in the Eurozone, the trilemma suggests two possibilities. Either public opinion is successfully ignored in countries like Germany, Greece, and Ireland; or the European Monetary Union will come under threat in the longer run.

Kevin O'Rourke is Professor of Economics at Trinity College in Dublin. He is speaking in the panel "Optimal Currency Areas and Governance: The Challenge of Europe" at the Bretton Woods Conference on April 10, 2011.

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Jean Pisani-Ferry, Director of Bruegel in Brussels, speaking in the panel "Optimal Currency Areas and Governance: The Challenge of Europe" at the Bretton Woods Conference on April 10, 2011.

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Niels Thygesen, Emeritus Professor of International Economics at the University of Copenhagen,speaking in the panel "Optimal Currency Areas and Governance: The Challenge of Europe" at the Bretton Woods Conference on April 10, 2011.

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After reviewing the panelists' contributions, Wendy Carlin points out that the expectations of Europe's core and Europe's periphery haven't been met. The core, notably Germany, entered the European Monetary Union with a view to the benefits of a single market. The periphery considered the EMU as a means to achieve price stability. Yet, the institutional wage bargaining that characterizes the German labor market wasn't available in the periphery, and that's one reason why inflation was low in Germany and high in the periphery, says Wendy Carlin. Real interest rates exercised a destabilizing role.

The video shows Wendy Carlin, Professor of Economics at the University College London, speaking in the panel "Optimal Currency Areas and Governance: The Challenge of Europe" at the Bretton Woods Conference on April 10, 2011.

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Jeffrey Frankel, Professor of Capital Formation and Growth at the Kennedy School of Government at Harvard University, speaking in the panel "Optimal Currency Areas and Governance: The Challenge of Europe" at the Bretton Woods Conference on April 10, 2011.

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Wolfgang Munchau, Associate Editor at the Financial Times, speaking in the panel "Optimal Currency Areas and Governance: The Challenge of Europe" at the Bretton Woods Conference on April 10, 2011.

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Q&A and discussion in the panel "Optimal Currency Areas and Governance: The Challenge of Europe" with Andre Sapir, Carl-Ludwig Holtfreirich, Kevin O'Rourke, Jean Pisani-Ferry, and Niels Thygesen.