- Paul de Grauwe (2012): “The situation of Spain is reminiscent of the situation of emerging economies that have to borrow in a foreign currency…they can suddenly be confronted with a ‘sudden stop’ when capital inflows suddenly stop leading to a liquidity crisis”.
- Lorenzo Bini Smaghi (2013): “… countries which lost competitiveness prior to the crisis experienced the lowest growth after the crisis”.
- Hans Werner Sinn (2010): “The lesson to be learned from the crisis is that a currency union needs ironclad budget discipline to avert a boom-and-bust cycle in the first place”.
- Paul Krugman (2012): “… on the eve of the crisis (Spain) had low debt and a budget surplus. Unfortunately, it also had an enormous housing bubble, a bubble made possible in large part by huge loans from German banks to their Spanish counterparts”.
Most observers understand that all these ‘usual suspects’ have played a role and may be interrelated, but do not offer a way to quantify their respective importance. In this context, it is difficult to frame policy prescriptions on macroeconomic policies and on reforms in the Eurozone.
Given the scale of the crisis, understanding the dynamics of the Eurozone is a major challenge for macroeconomics today.
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