How abnormal was the stock market in October 2008?

By: Paul De Grauwe, Leonardo Iania, Pablo Rovira Kaltwasser

Last month saw a stock market move with a probability of occurring only once in 73,357,946,799,753,

900,000,000 years. What does this tell us about modern finance?

The depression of 2009

Wrong government policies on both sides of the Atlantic are turning a crisis into a catastrophe.

Getting desperate

There is clear blue water between us and the Americans

The case for adapting the policy framework in the euro area

By: Jean Pisani-Ferry, André Sapir and Alan Ahearne

Financial market turbulence, an appreciating euro, inflation pressures and a slowing economy pose serious challenges for the euro area. At a time when euro area member states increasingly pursue national strategies, there is growing doubt about the euro area’s ability to meet these challenges. A report by the think tank Bruegel published last week provides a blueprint of how to improve the policy making system. Eurointelligence has asked three of the authors – all regular contributors to our EMU Monitor - to outline the main issues. Their main message is that the maintenance of a learning mindset and a willingness to adapt the policy framework in light of the experience gained is crucial to the long term success of the euro.

A crisis for those whose first language is English

By: Eurointelligence ECB Watch

Like it or not, the credit crunch is an asymmetric crisis. There will be no decoupling, but it will not affect everybody as badly as it will affect the US. That includes the euro area, which benefits from some important stabilisers.

How effective is peer pressure in practice?

By: Roel Beetsma and Massimo Giuliodori, University of Amsterdam

The Stability and Growth Pact is an instrument through which EU countries can impose peer pressure on each other. How effective was such peer pressure in the past? Using budgetary forecasts since 1994 we find that budget plans of large countries - though independent from each other - had a significant influence on budget plans of small countries. If peer pressure is supposed to work in disciplining fiscal policies in the EU, then it is important that large Member States are provided with the right incentives to follow disciplined policies. Smaller countries are then expected to follow.