WSJ Documentary on Debt Crisis

I watched a short documentary on Greece and the European Debt Crisis by the Wall Street Journal.  There were two major points that stood out to me as it pertains to the research question:

1. Countries belonging to the Eurozone must be fiscally responsible

This does not mean that member countries never borrow or spend on credit. It means that they are both willing and able to pay back money that they borrow.

2. Some central authority, like the ECB, must ensure the members of the Euro area maintain fiscal responsibility if they refuse to do so on their own.

It is doubtful that the Euro will be sustainable in the long run if member countries will continually require bailouts or default on their debt.

Equilibrium Exchange Rates

Based off our conversation on exchange rates, we will need to establish what it means for an exchange rate to be in equilibrium. I will post more about the various ways of defining this in the future.