The Impact of the Euro in Eurozone

Yichun Chen ychen33@gmu.edu

Policy and Government Department, George Mason University
Introduction
Since 1991, the Euro has been a currency in 19 countries, which
become a symbol of the European unity. Today, as economic crisis
happened in Europe such Greece and Spain crisis since 2008, what the
euro has brought became more and more complex.
However, most previous research focus on how the Euros flaws make
countries with strong economy stronger and make countries with weak
economy weaker, they ignore the benefit that the Euro brought
(Schwartz, 2016).
Thus, the purpose of this poster is to figure out the impact that the
Euro has brought to euro zone.
The main research question is, how the euro effect economic
integration in Europe?

The European Debt Crisis

Greek Depression
Ireland Debt Crisis
Portugal Spain Italy...
The peculiarity of the Greek crisis lies in the fact that traditional
methods, for example devaluation of the national currency, cannot be
merely used because Greece is in the Eurozone and its currency (Euro)
is common for other 26 European countries. The situation is
complicated by the fact that legal procedure of withdrawing from the
Eurozone is not provided (Plotnikov and Novik, 2013). At the present
time a number of countries of the European Union (EU) like Greece,
Ireland, Portugal, and Spain have a serious problem: After economic
bubbles on the markets of consumption and residential property have
burst, these countries have to experience a long period of recession.
During this period they will have to pay a high interest on their
sovereign bonds.

The Eurozone, European Union, and other countries using the euro.
Map by Evan Centanni, from blank map by Ssolbergj. License: CC BY-SA

Tourism Industry

Fig. 2. The Change from before integration to after integration

Fig. 2. shows how economic integration make economics relationships become different.

Economic Integration

European politicians and some economists regarded that monetary

union should succeed ignoring the existence of asymmetric shocks and
the shortage of adjustment mechanisms. There are reasons:
First of all, they believe if countries published strong fiscal policies, the
incidence of asymmetric shocks would be under control (Krugman,
2012).
Second, as ability was reduced of demand-side policies for against
asymmetric shocks, structural reforms such as freeing labor and product
markets should be undertook to make up the situation.
Thirdly, it should be easy to evaluate risk characteristics as the euro
could fix national interest rates in some degree (Fernndez-Villaverde et
al., 2013).

Tourism is an important industry in the European Union. For economy,

socialization and culture, tourism is an indisputable cohesive element.
From Fig.3, since 1999, France, Italy and Austria joined the Eurozone,
the quantity of British tourists to France and Italy was increase
obviously.

Discussion
This review address important issues closely related with the
functioning of the euro area. I hope these contributions could help to
improve the understanding of the euro for policy maker and scholars
who care about Eurozone.
The European crisis effects life of Europeans and bring negative effect
indirectly. The trade and tourism industry of EU are both impacted in
down side. In a long term, the benefit that the euro brings to trade of
EU will continue and the limitation of the euro will be come over as
governments need t to control economy.
My research has not offered examples of trades between members of
EU, which needs to compare data that before and after the European
crisis of trade with models. Also, the future research should focus
generally on analyzing data and provide graphs to explain. The
researchers could explore that what would happen if Greece not
longer participate Eurozone, how the economy and trade of Greece
would change and would the countries around Greece be effected too
at the same time. According to this distribution, future policy-maker
could balance the benefits and defects of the euro.

References

Fig. 4. British tourists in non-Euro host countries Source:

World Tourism Organization (2013).

Fig. 1. How the euro lead to the European Debt Crisis

Fig.3 shows British tourists in Euro host countries from 1994 to 2012, France, Italy, and Austria were chosen on based on
data availability.
From 2008 to 2009, the amount of tourists decreased strongly and kept down until 2011, and then rise again slightly.

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