Visiting scholar Xavier Debrun, and Bruegel director Jean Pisani-Ferry contribute to the emerging discussion on reform strategies in the euro area. An earlier version of this note was presented to the Eurogroup Working Group of the Economic Policy Committee of the EU.

Event studies represent an increasingly popular method to evaluate the welfare effects of economic policy decisions. The basic idea is that stock market reactions to the announcement of policy decisions contain superior information about the welfare effects of these decisions. This paper...