Growth dividends The European Commission has estimated that the euro should add an additional 5.5 percent to growth over the first 10 years.
While currency hassles have diminished, the deeper effects remain elusive. It's still expensive to lay someone off in Germany, for instance, where workers get fat severance packages and high unemployment benefits. That saps productivity and makes employers reluctant to hire new staff.
Chancellor Gerhard Schroeder, in fact, says Germany must reduce its unemployment rate of 9.2 percent without resorting to US-style rules that make it easier to fire people.
The notion that the euro will push governments to overcome political resistance to labor-market reform "is one of the conventional wisdoms repeated by European officials," said Swedish economist Lars Calmfors, who headed the government commission that recommended Sweden stay out of the euro.
That part remains an experiment, he said.
"It might be the case. But I could dig up as many arguments in the opposite direction," said Calmfors. "There is no solid theory to support the case, and no empirical evidence."
RSS