18.

2 Compatitive advantage in international trade

*David Ricardo: Law of comparative advantage
A country has a comparivtive advantage over another in the production of a goof
if it can produce it at a lower opportunity cost (relative advantage)than
competitors. This is why trade is beneficial!
Opportunity cost
The highest/valued alternative that must be given up to engage in an activity.
(als ik naar het theater ga ipv naar de film dan zijn de opportunity cost de kosten
van de film)
*Adam Smith (1723-1790): Principle of absolute advantage
A country has an absolute advantage over another in the production of a good if
it can produce it with less recourses than the other country. (Specialise in what
you do best).

18.3 How Countries gain from international trade

Autarky:
A situation in which a country does not trade with other countries (completely
self-sufficient, produce everything themselves (1000 years ago)
Terms of trade:
The ratio at which a country can trade its exports for imports from other
countries.
The Gains from trade
Trade increases welfare (specialization- comparative advantages); so trade makes
us richer.
So why dont we see complete specialization?
Not all goods and services are traded internationally: Transport costs
Production of most good invoves increasing opportunity costs
Tastes of consumers are culturally different
(Services sometimes difficult to import/export) niet in boek
Where does comparitive adventage come from:
Climate and natural resources
Relative abundance of labor and capital
Technology
External economics (reducation in a firms costs that result from an
increase in the size of the industry.
*Heckscher-Ohlin: global trade patterns (Build on theory of David
Ricardo)
The model essentially says that contries will export products that use their
abundant and cheap factors of production and import products that use the
countries scare factors.
*Paul Krugman: New Economics (reaction to David Richardo &
Heckscher-Ohlin) Nobel Price Econo.08
The prize was given for Krugmans work explaining the patterns of
international trade and the geograhic concentration of wealth, by
examining the effects of economies of scale and of consumer perferences
for diverse goods and services.

Krugmans theory also took into accoant transportation coasts, a key

feature in producing the home market effect: effect states that the country
with the larger demand for a good shall, at equilibrium, produce a more
than proporionate shaer of that good and be a net exporter of it.

18.4 Government policies that restrict international trade

Free trade:
Trade between countries that is without governmental restrictions
A. Consumer surplus:
An economic measure of consumer satisfaction, which is calculated by analysing
the difference between what consumers are willing to pay for a good or service
relative to its market price. A consumer surplus occurs when the consumer is
willing to pay more for a given product than the current market price.
B. Producer surplus:
An economic measure of the difference between the amount that a producer of a
good receives and the minimum amount that he or she would be willing to accept
for the good. The difference, or surplus amount, is the benefit that the producer
receives for selling the good in the market.
C. Economic surplus: consumer+producer surplus

Methods of restricting trades

International trade helps consumers but hurts firms that are less
efficient than foreign competitors. As a result these firms are often
strong supporters of government policies that restrict trade between
countries. These policies often take the following forms:
(1) Tariffs:
(2) Quotas and voluntary export restraints:
Subsidies on domestic products
(1) Tarrifs:
Taxes imposed by government on good imported into a country
Argument for restricting trades
Unemployment (saving jobs)
Self-sufficiency
Infant industry arguments
To prevent dumping (dumping: selling a product below it cost price)

Import
Consumer surplus
Producer surplus
Economic surplus
Government tariff
revenue
Cost of protection

Before Tariff with

Import (1)
Q2-Q1
1,2,3,4,5,6
7
1,2,3,4,5,6,7

After Tariff with

import (1)
Q4-Q3
1,2
3,7
5
4,6

(2) Quotas and voluntary export restraints:

A quota is a numeric limit imposed by a government on the quantity of a good
that can be imported into the country. A voluntary export restraint (VER) is an
agreement negotiated between two countries that places a numeric limit on the
quantity of a good that can be imported from one country to the other country.

Quota = 2-1
Import
Consumer surplus
Producer surplus
Gain Foreign producers
Cost of protection
(deadweight loss)

Before Quota with

Import (2)
4-3
A,B,C,D,G,H

After Quota with

import (2)
2-1
G,H
A,E
B
C,D

18.5 the argument over trade policies and globalization

World Trade Organisation (WTO):
An international organisation that oversees international trade agreements
Globalisation:
the process of countries becoming more open to foreign trade and investments
Arguments against free trade
Anti-globalisation: People who are against ffree trade because they believe it
harms their culture
Protectionism: The use of trade barriers to shield domestic firms from foreign
competition, which is often supported by the following arguments:
Saving jobs
Protecting high wages
Protecting infant industries
Protection national security
Trading Blocks:
Free Trade area: No tariffs and quotas between themselves, but restrictions
to non-member countries
Customs union: Like free trade area but with common external tariffs and
quotas with non-member countries.
Common market: Like customs union but also with futures of one single
market, like tax system

Dumping: selling a product for a price below cost of production

BRICs
Brazil
Russia
India,
China
South- Africa
Why the BRICSs
Potential of global economic heavyweights
Its all abbot their ability to influence the global economy and global
markets
Almost half of world population
Majority of world GDP growth
So these are not just devolving countries with growth successes
Effects on world order
Reshaping the global economic order
Engine of the global recovery process
Ukraine: BRIC-power versus the-west power
No natural fit as group: problems to create a true power block
*Goldman Sachs: Bric as a Trading Block
Goldman Sachs did not argue that the BRICs would organize themselves into an
economic bnlock, or a formal trading association, as the European Unions has
don. However, there are some indication that the four BRIC countries have been
seeking to form a political club or alliance, and thereby converting their growing
economic power into greater geopolitical clout. On June 16, 2009, the leaders of
the BRIC countries held their first summitt in Yekaterinburg, and issued a
declartion calling for the establishment of an equitable, democratic and
multipolar world order. Since then thay have met in Brasilia in 2010, met in
Sanya, on Chinas Hainan Island in 2011 and in New Delhi, India, in 2012.

Chapter 29: The monetary system

The meaning of money
Money is the set of assets in the economy that people regularly use to buy
goods and services from other people. According to the economist, money
included only those few types of wealth that are regularly accepted by sellers in
exchange for goods and services.
The function of money
Money has three functions in the economy:
1. A medium of exchange: an items that buyers give to sellers when they
want to purchase goods and services.
2. A unit of account: the yardstick that people use to post prices and record
debts
3. A store of value: an item that people can use to transfer purchasing
power from the present to the future
Liquitidity: The ease with which an asset can be converted into the economys
medium of exchange.
F.e. money is the medium of exchange and thus most liquidable
F.e. stock and bonds can be relatively easily to liquidize.
F.e. A painting of rembrandt takes longer to less and thus longer to
liquidize
The 2 kinds of money
Commodity money: money that takes the form of a commodity with
intrinsic value; instrinsic value: the object is valueble even if it is not used
as money. F.e. goldvalueble on itsself. Although gold has been the most
common form of commodity money there are other example. F.e. people in
Zimbabwe lost their confidence in the Zimbabwean dollar and therefor
started to use cigarrets as a form of payment, because people had more
trust in the value of cigarets then in the value of the Z dollar.
Fiat money: money without intristic value that is used as money
beacasue of government decree. F.e. paper money.
Money in the economy
Money stock: the total quantity of money circulating in the economy. But what
is the quantity of money?
M1 (narrow money): all the coins and notes in circulation (currency) and
other money equivalents that are easy to convert in to cash
M2 (broad money): M1+short-term deposits on banks
M3 (broad money): M2+ longer-term deposits
The important point is that the money stock for an advanced economy include
not just currency but also deposits in banks and other financial institutions that
can be readily accessed and used to buy goods and services.
The role of the central bank:
Whenever an economy relies on a system of fiat money (all modern economies
do) some agency must be responsible for the regulation of this system. This
agency is generally known as the Central bank, an institution designed to
regulate the quantity of money made available in the economy; also known as
the money supply.

The central bank of an economy has the power to increase or decrease the
amount of currency in that economy. The set of actions taken by the central bank
in order to affect the money supply is known as monetary policy.
One very important tool of the central bank is the open-market operation
which includes the purchase and sale of non-monetary assets from and to the
banking sector by the central bank.
The European central bank ECB (eurosystem)
The ECB is the overall central bank of the 16 countries comprising the European
Monetary Union. Its primary objective is to promote price stability throughout the
euro area and to design and implement monetary policy that is consisted with
this objective. In the pursuit of price stability, it aims to maintain inflation rated
below but close to 2 per cent over the medium term. An important feature of the
ECB and the euro system is that it is independent.
The system made up of the ECB plus the national central banks of each of the 16
countries comprising the European Monetary Union (Eurosystem).
The bank of England:
The bank of England is the central bank of the United Kingdom. Like the ECB that
bank of England primary duties is to deliver price stability. Also in common with
the ECB the bank of England is independent. A difference is that in order to
maintain price stability the bank of England is not free to determine for
themselves what this means. This is done by the government of England.
The federal reserve system
The federal reserve system is the central bank of the United States
Banks and the money supply
The amount of money in an economy includes both the currency and the balance
of current bank accounts. Because demand deposits are held in bank, the
behaviour of banks can influence the quantity of demand deposits in the
economy and therefor can affect the money supply
Reserves: deposits that banks have received but have not loaned out.
If bank hold all deposits in reserve, banks do not influence the supply of
money.
Fractional-reserve banking: a banking system in which banks hold only a
fraction of deposits as reserves. The fraction that they hold as reserves is called
the reserve ratio. If a bank decides to hold more money than the reserve
requirements this is called excess reserves. Thus, when a bank only holds a
fraction of deposits in reserve, the bank creates money and so the money supply
increase.
The amount of money the banking system generated with each euro of reserves
is called the money multiplier. The money multiplier is the reciprocal of the
reserve ratio = 1/R (R: reserve ratio)
(1/0,12 = 8,33 For every euro saved the bank can create 8.33 euro)
First European Bank (RR 10%)
Reserves
Loans
Second European Bank (RR 10%)
Reserves
Loans
Third European Bank (RR 10%)
Reserves

10.00
90.000

Deposits

100.000

9.000
81.000

Deposits

90.000

8.100

Deposits

81.000

Loans

72.900

Causes of increase in money supply

Bank reduce their reserve ratio (normally about 12%)
The non-banking private sector chooses to hold less cash
Public sector build up deficit
Inflow of funds from abroad

The central banks tools of monetary control

Because banks create money in a system of fractional-reserve banking, the
central banks control of the money supply indirect. In general, a central bank has
three main tools in its monetary toolbox:
1. Open-market operation: a open-market purchase of bonds by the
central bank increases the money supply, on the other hand; if the central
bank sells their bonds they decrease the money supply. This is also called
outright open-market operations: the outright sale or purchase of nonmonetary assets to or from the banking sector by the central bank without
a corresponding agreement to reverse this transaction at a later day.
2. The refinancing rate: when the central bank lends money to commercial
banks on a short term they will set an interest rate at which they are
willing to lend. (interest rate=refinancing rate). Although outright openmarket operations have traditionally been used by central banks they
nowadays often chose to make an repurchasing agreement (repo). We
speak of an repurchasing agreement when the sale of a non-monetary
asset together with an agreement to repurchase it at a set price at a
specified future date is specified.
a. Money market: the market in which commercial banks lend money
to one another on a short-term basis.
i. Refinancing rate: the interest rate at which the ECB lends
on a short-term basis to euro area banking sector
ii. Repo rate: the interest rate at which the bank of England
lends on a short-term basis to the UK banking sector
iii. Discount rate: the rate at which the Federal Reserve lends
on a short-term basis to the US banking sector
3. Reserve requirement: The central bank may also influence the money
supply with reserve requirements, which are regulations on the minimum
amount of reserves that banks must hold against deposits.
The motives for holding money
Transactions motive
Precautionary motive
Assets/ speculative motive
Determinants of demand for money
The nominal national income
Frequency with which people are paid
Financial innovations (e.g. credit card)
Speculation about future return on assets
Rate of interest

When the money supply increases too fast, the central bank uses the quantity
theory of money. The equation of exchange: MV=PY. (fisher equation)
M:
Money supply
V:
Velocity of circulation
P:
Price level
Y:
Real output
If this equation is solved the central bank can predict the change in M (without
intervention), and bases their decisions on that. If they need to change the M
they can act according to the following steps:

Problem with controlling the money supply

i.
The first problem is that the central bank does not control the amount of
money that households choose to hold as deposits in banks. ( the more
reserves the more money the bank can make)
ii.
The second problem is that the central bank does not control the amount
that bankers choose to lend (banks can hold excess reserves)

College 5: Exchange rates

14.1 The balance of Payments Account
A countries Balance of payments account records all the flows of money
between residents of that country and the rest of the world. There are three main
parts of the balance of payments account which are the (1) current account, the
(2) capital account and the (3) financial account.
(1) Current account records payments for import and exports of goods and
services, plus income flowing into and out of the country, plus net transfers
of money into and out of the country. It is normally dived into four
subdivisions. (lopende rekening, alle geldstromen tussen thuisland en
buitenland)
1. Trade in goods: records import and exports of physical goods. Export
results in an inflow of money(credit), and import results in an
outflow of money (debit). The balance of these is called the balance
on trade in goods/visible trades or merchandise balance. (export
means revenue/ surplus)
2. Trade in service: records import and export of services (transport,
tourism, insurance). Balance of these is called the services balance.
3. Income : these consists wages, interest and profit into and out of the
country. F.e. dividend earnings by a foreign resident from shares in
an NL company would be ann outflow of money (debit)
4. Current transfers of money: these include government contributions
to and receipts from the EU and international organisations, and
international transfers of money buy private individuals and firms.
(government contribution to and from EU ect.)
Current account balance is the overall balance of all of the above mentioned subdivisions.
(2) Capital account records the flow of funds, into the country (credits) and
out of the country (debits), associated with the acquisition or disposal of
fixed assets (e.g. land), the transfer of funds by migrants, and the payment
of grants by the government for overseas projects and the receipt of EU
money for capital projects. (e.g. patents)
(3) Financial account: of the balance of payments records cross-border
changes in the holding of shares, property, bank deposits and loans,
government securities, ect. In other words, unlike the current account,
which is concerned with money incomes, the financial account is
concerned with the purchase of sale and assets. (kapitaal rekening)
1. Direct investment: If a foreign company invests money from abroad
in one of its branches or associated companies in the NL
(investment= income for NL, any subsequent proft from this
investment is records as an investment income outflow on the
current account)
2. Portfolio investment: this is change in the holding of paper assets
such as company shares (shares and bonds)
3. Other investment: where direct and portfolio investments are long
term, these consists primarily of various types oof short term
monetary movement between BL and the rest of the world
( deposits to foreign banks) (short term)
(4) Official reserve (all foreign currencies and gold that are owned by a
country)
Current account
IN
Export
Inkomen (w+i+p)

UIT
Import
Inkomen (w+i+p)

SALDO

SALDO should be 0
Financial account
IN
Capital import

UIT
Capital export

SALDO
SALDO should be 0

Inkomen in economie: loon +rente+pachte+huur+winst (wages, interest,

profit)
Een hoge kapitaal export (financial) veroorzaakt een jaar later een enorme
geldstroom aan winst en inkomen (current).
14.2 Exchange rates
One of the problems in assessing what is happening to a aprticular currency is
that the exchange rate may rise or fall against other currencys. In order to gain
an overall pricture of its fluctuations, therefore, it is best to look at a weighted
average exchange rate against all other currencies. This is known as the
exchange rate index or effective exchange rate. (weight is given toe ach
currency based on the proportion of trade done with that country.
Free floating exchange rate: when the government does not intervene in the
foreign exchange market, but simply allows the exchange rate to be freely
determined by demand and supply.
Any shift in the demand or supply curves will cause the exchange rate to change.
A fall in the exchange rate is called an depreciation. A rise in the exchange rate is
called a appreciation.
Increase in exchange rate = appreciation
Decrease in exchange rate = depreciation
Major

possible causes of a depreciation: (opposite causes appreciation)

A fall in domestic interest rates
Higher rates of inflation in the domestic economy than abroad
A rise in domestic incomes relative to incomes abroad
Relative investment prospects improving abroad
Speculation that the exchange rate will fall.

Possible causes for an appreciation (LES)

Good competitive positive, relatively low prices (current account)
High interest rate (Financial account)
Positive investment climate ( Financial account)
Current account
Export= demand for our currency
Import= supply for our currency
If export is bigger than import the demand is higher than the supply
exchange rate appreciation (positief saldo = wisselkoers omhoog)
If import is bigger than export the supply is higher than the
demandexchange rate depreciation (negatief saldo = wisselkoers
omlaag)
Financial account
Inflow bigger then outflow the demand is higher than the
supplyexchange rate appr.
Outflow bigger then inflow the supply is higher than the
demandexchange rate depr.

College 6: The exchange rate system

14.3 Exchange rates and the balance of payments: no government or
central bank intervention
In a free foreign exchange market, the balance of payments will automatically
balance, but why?
F.E. when UK resident buys foreign goods or assets, the importers of them require
foreign currency to pay fort hem. They thus supply pounds. A floating exchange
rate ensures that the demand for pounds is equal tot he supply. It thus also
ensures that the credits on the BoP are equal to debits: the balance of the BoP.
This does not mean that each part of the BoP seperately balnces, but simply that
any current account defict should be matched by a captial or financial account
surplus.
Balance of Payment (BoP)
Current account: export/import, income account (wages, interest, profit)
Capital account
Financial account: Direct & Portfolio investment
Official reserve
Effect on national income
Current Account has an directly effect on national income
Financial account has an indirect effect (through income account: interest
& profit)
Inflation is caused by two mechanisms

Dynamic relationship between export position and exchange rate

Negative relationship:
(tegenovergestelde)
1 Euro = 1 Dollar
Euro depreciates Dollar
appreciates
1 Euro = 0,5 Dollar
Positive relationship (zelfde reactie)
Because of depreciation the euro
becomes cheaper more export
competitive position increase
exchange rate also increases.
This dynamic relationship holds under a system of free floating exchange
rates
Has a direct relationship to the argument in favour of a system of free
floating exchange rates: the automatic balancing of the BoP
A low euro is:
Good for exporting companies (export to non-euro country)

Bad for consumers ( pay a higher price for imports

Big Mac Index (predictor of future exchange rate)

Based on PPP: Purchasing Power Parity
In the long run, exchange rates should adjust to equal the price of a basket
of goods and services in different countries
BMI shows current over- or undervaluation of a currency and is there for a
predictor of future exchange rates.
Floating exchange rates, everything so far ( vraag en aanbod)
14.3 Exchange rates and the balance of payments: With government or
central bank intervention
The government of central bank may be unwilling to let the countrys currency
float freely. Frequent shift in demand and supply would change the exchange rate
uncertainty for business. The bank can do two things bases on their objective
Reducing short term fluctuations:
o Using reserves
o Borrowing from abroad
o Raising interest rates
Maintaining a fixed rate of exchange over the longer term: Governments
may choose to maintain a fixed rate over a number of months or even
years. The following are possible methods it can use to achieve this:
o Contractionary policies: Government deliberately curtails aggregate
demand
Fiscal policy: raising taxes and/ or reducing government
expenditure
Cont. monetary policy: reducing money supply and raising
interest rates
Reduction in aggregate demand:
Reduces the level of consumer spending
Reduces the rate of inflation
o Supply-side policies: Government attempts to increase long-term
competitiveness of UK goods by encountering reductions in the
costs of production and/ or improvements in the quality of UK goods
(f.e. improve quality training)
o Controls on imports and/or foreign exchange dealing: Government
restricts the outflow of money, either by restricting foreign access to
foreign exchange, or by using tariffs and quotas.
14.4 Fixed versus Floating exchange rates
Main advantages Fixed
Main Disadvantage Fixed
1. Certainty (international
1. Imported inflation
trade and investment)
2. PPP theory does not work
2. Little or no speculation
3. Under/overvalued currency
3. Prevents governments
4. Higher interest rates may discourage
pursuing
long-term business investments.
irresponsible
5. Higher interest rates will have a damping
marcoeconomic
effect on the economy by making
policies
borrowing more expensive
Main advantages Floating
Main Disadvantage Floating

1. Automatic correction
(BoP)
2. No problem of
international liquidity
and reserves.
3. Governments are free
to choose domestic
policy
4. Insulation from
external economic
events

1. Uncertainty for traders and investors,

especially because of speculations. ( can
be tackled by forward exchange market:
setting exchange rate fixed when
investing)
2. Unstable exchange rates
3. Speculation (see 1)
4. (Lack of discipline on the domestic
market)

14.5 The origins of the Euro

Adjustable peg
There have been many attempts to regulate exchange rates since 1945. By far
the most succesfull system was the Bretton Woods system, which was
adopted at 1945 till 1971. This was a form of adjustable peg exchange rate,
where countries pegged their exchange rate to the US dollar, but could re-peg it
at a lower or higher level.
Managed floating
The system was abonded in 1971 and what followed was a period of exchange
rate management known as managed floating. Under this system, exchange
rates where not pegged but allowed to float. However, central banks intervened
from time to time to prevent excessive exchange rate fluctuations. This system is
still used today.
Semi-pegged
In Europe there were attempts to create greater exchange rate stability. The
European system involved establishing exchange rate band: upper and lower
limits within which exchange rates were allowed to fluctuate. The name given to
the EU system was exchange rate mechanism (ERM) 1979

Before a country could join the (EMI) single currency (1999) they had to achieve 5
goals:
1. Inflation: should be no more than 1,5% above the average inflation rate of
the three countries in the EU with the lowest inflation.
2. Interest rates: rate on long-term government bonds should be no more
than 2% above average of the three countries with the lowest inflation.
3. Budget deficit: should be no more than 3% of GDP
4. National debt: should be no more than 60% of GDP
5. Exchange rates: currency should be within normal ERM band for 2 year
without excessive intervention.
Managed floating or semi-pegged exchange rate
Most countries have an exchange rate that is between floating and pegged, this
is called a managed floating exchange rate or a semi-pegged exchange rate. If

this is done there usually is some sort of intervention by the central bank and
government. The central bank does this by influencing the demand and supply of
a currency in order to make sure that the exchange rate stays between a lower
and upper boundary. (EU)
is expense because increase in money supply increase inflation
Costs of holding official reserves

Bretton wood Chronological

1. 1944/45 (john Maynard Keynes, werd niet naar geluisted in 1918)
2. IMF and World Bank
3. Countries fixed their exchange rates to the dollar
4. Dollar was fixed to the gold standard
5. Dollar most important currency in the world (international reserves)
6. Created a fast recovery after WWII
7. Vietnam war: US printed additional dollars
8. Inflation in US and growing trade deficit (BoP)
9. 1971: Bretton Woods system fell down
10.After Bretton Woods: Managed floating
Bretton woods to Euro
Bretton woods: Fixed exchange rates
After Bretton woods: Managed floating
Europe: create greater exchange rate stability
Exchange rate mechasim (ERM)- 1979 (semi-pegged system : exchange
rate target zone)
14.6 Economic and monetary (EMU) in Europe
Advantages of the single currency
Elimination of the costs of converting currencies.
Increased competition and efficiency. There became more transparency in
pricing because price differences remained between countries. This has
put pressure on prices in high-cost firms and countries.
Elimination of exchange rate uncertainty (between the members).Removal
of exchange rate uncertainty has helped to encourage trade between
eurozone countries.
Increased inward investment. (the injection of money from an external
source into a region, in order to purchase capital goods for a branch of a
corporation to locate or develop its presence in the region)
Lower inflation and interest rates.
Disadvantages of the single currency
The lack of an independent monetary and exchange rate policy. If some
countries have higher rates of inflation, then how are they to make their
goods competitive with the rest of the Union? With separate currencies
these countries could allow their currencies to depreciate.
Asymmetric Shocks. Shocks (such as an oil price increase or a recession in
another part of the world) that have different-sized effects in different
industries, regions or countries.

*Robert Mundell: Optimal Currency Area

The optimal size of a currency area is one that maximizes the benefits from
having a single currency relative to the costs. If the area were to be increased or
decreased in size, the costs would rise relative to the benefits.
Robert Mundell states that a group of countries for which the benefits of
replacing national currencies with a currency exceed the costs, is an optimal
currency area.
Costs of a common currency:
o Sacrifice of policy independence (the loss of exchange rate policy as
a means of stabilizing the domestic economy) This cost will be the
highest when countries experience asymmetric shocks.
Benefits of a common currency:
o Reduction in transaction costs
o Reduction in exchange rate uncertainty
It is more likely that benefits outweigh the costs if:
Countries experience symmetric shocks.
o European core (France, Germany, Belgium, the Netherlands) =
symmetric
o GIIPS (Greece, Ireland, Italy, Portugal, Spain) = asymmetric
Extensive trade with each other
o European core = YES
o GIIPS = NO
So in general the Euro is not a optimal currency area (except for the core)
The European Core versus GIIPS (Greek, Ireland, Italy, Portugal, Spain)
Divergence
European Core: relatively less economic growth and less inflation
GIIPS: high economic growth (pertly because entering eurozone ment a fall
in the interest rates of these countries), and thus high inflation
o Loss in indutrial competitiveness
o Trade deficts
Traditional differnce in government defict and debt.
Current issue:
TTIP (Transatlantic Trade and Investment Partnership)
ISDS: Investor State Dispute Settlement
The Crisis explained

Mortage Crisis USA

Credit Crisis worldwide

Debt crisis/ Eurozone
Crisis
Economic Crisis

2007
2008
2009
2010