According to Eurostat, the annual inflation rate in the Euro area was only 0.7% in February 2014. A year earlier that same rate stood at 1.8%. This has prompted concerns about the Euro Area slipping into deflation. Deflation is defined as a general decrease of the price level. There have been several such episodes in […]
The euro under construction
The crisis in the euro area is long and painful, and progress towards its resolution is not proceeding in a linear way. The problem by now has been well-diagnosed. The euro was put in place without the proper institutions to support it. A monetary union needs a fiscal union pillar, a financial stability pillar and […]
Will Cyprus exit?
Last week, Paul Krugman argued here that Cyprus must leave the euro. “The convenience and efficiency of a single currency is gone; meanwhile, the future for Cyprus on the euro is one of years of grinding deflation and catastrophic austerity. Is the hope of someday, somehow restoring the status quo ante enough to justify all of this?,” […]