IGBS Zagreb has organized Professor Andreas Hauskrecht's public lecture "The Crisis of the Euro".
The lecture took place on Wednesday, July 7, in Arcotel Allegra hotel, Branimirova 29, Zagreb.
Professor Hauskrecht is currently finishing a paper on the euro at Kelley School of Business, and has been teaching at IGBS Zagreb MBA Program this semester. The fate of the euro is very interesting for the Croatian business community as a potential future EU and euro member country.
IGBS students, alumni, representatives from banking sector, from The Institute of Economics, Zagreb and from U.S. Embassy have attended the lecture.
Lecture Abstract:
In contrast to Robert Mundell's Optimum Currency Area theory and his recommendation of forming a monetary union, the economic fundamentals of Euro area member countries have not harmonized. The opposite holds: the Euro core countries - most of all Germany, but also the Netherlands and Finland - increased productivity growth while limiting nominal wage growth.
However, Mediterranean countries - particularly Greece, but also Spain, Portugal, and Italy - have dramatically lost international competitiveness. Although the overall balance of payments for the Euro area at large is almost balanced, internal disequilibria are skyrocketing and default risk premiums and tensions within the Euro area are rising, thus jeopardizing the stability of the monetary union. The findings confirm that a common currency without political union is inherently unstable. The international financial and economic crisis has merely triggered events which highlight this instability.
The lecture discusses three possible scenarios for the future of the Euro: a laissez faire approach, a bailout, and finally an exit strategy for the Mediterranean countries and the respective consequences for the future of the Euro as an international key currency. The lecture will end with some lessons to be learnt for future euro member candidates.
Business.hr, June 14, 2010, Professor Hauskrecht article
