This paper makes three points. The first is that external imbalances between Member States are relevant for the performance of a monetary union when the latter is not backed by a strong political commitment and a solid political framework. Eurozone policymakers have ignored these inter-member...

The authors (A&F) reply to Andrea Terzi's comment on their previous paper, published in the December 2015 issue of this Review. Andrea Terzi's two main objections to A&F analysis are: that diverging current-account (CA) balances enhanced the fragility of the member countries of the euroarea, but...