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Essay (Individual work; 1500 words maximum; include a list of references.) Remember that you are to write an essay – points a) to c) are to help you see what should be included. The essay should read smoothly as a response to the question.
‘The ECB’s success in achieving low and stable inflation during the Eurozone’s first decade disguised the build-up of dangerous imbalances among the members.’ Provide an explanation and assessment of the claims in this statement.
In your answer you should use the models you have studied in this course to
a) Explain what could be meant by ‘dangerous imbalances’ among the members.
b) Use the AD-BT-ERU model to explain how imbalances could occur consistent with the ECB achieving its inflation target. Relate this to the performance of specific countries.
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