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Federal Reserve Bank of San Francisco
FRBSF Economic Letter
Long-run impact of the crisis in Europe: reforms and austerity measures
Fernanda Nechio
Abstract

The euro area faces its first sovereign debt crisis, highlighting the fiscal imbalances of member countries. Troubled countries are implementing austerity measures, with adjustments focusing on the short and medium run. However, a long-run solution to Europe's problems requires economic reforms that increase competitiveness and reduce labor costs in the peripheral countries. Such reforms would promote convergence of the euro-area economies and enhance the long-run sustainability of monetary union.


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Fernanda Nechio, "Long-run impact of the crisis in Europe: reforms and austerity measures" , Federal Reserve Bank of San Francisco, FRBSF Economic Letter, number 07, 2011.
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Keywords: European Union ; Debt ; Economic conditions - Europe ; Financial crises
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