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Submitted by carlos hurtado on
I agree. In my view, integration in the EU was effectively generating convergence, up to to 2007-2008. Both in the euro zone and out. That is what the data show. While it is clear that it happened together with financial bubbles, excessive private indebtedness, huge fiscal deficits and the like, all of that did not have to happen. In my opinion this is a valuable economic policy lesson against complaisance: it is in the good times, like 1999-2007 in the euro zone, that old structural problems need to be addressed. And it is then that attention must be given to the effects of capital inflows. In effect, in the "good years" in Europe unit labor costs soared in the smaller economies and credit exploded without a good evaluation of the quality of banks' assets portfolios and obviously without the right kind of prudential supervision