Eichengreen on Leaving the Euro

The Greek situation is regularly discussed as being “a threat to the Euro” and, on this blog and elsewhere in Irish commentary, it has revived the idea that the solution to our economic problems is to leave the Euro and re-establish our own currency.

This idea is often discussed as though membership of the Euro simply involves being locked into a disadvantageous fixed exchange rate, which we can address by getting out of the Euro. In fact, the process of leaving the Euro would be far more complex than that and could have many downsides that would offset the benefit of a more competitive exchange rate. Perhaps it’s been linked to on this blog before but this paper by Barry Eichengreen provides plenty of food for thought on this issue.

Update: Thanks to Philip for pointing out that Eichengreen has a new column on Greece and the Euro. Link here.