Crisis, Response, and Innovation in Europe

Abstract

The close economic ties between Europe and the United States and the crucial global monetary and financial role played by the City of London were the conduits for the lightning-fast spread of the crisis triggered by the sub-prime mortgage defaults in the U.S. and the consequent fall in global real aggregate demand in 2008. The effects of this crisis differed among euro area countries, among non-euro European Union countries, and among such neighboring nonmembers as Turkey and Russia. The differences appear to have been sharpest within the euro group.