Clas Wihlborg


Clas WihlborgClas Wihlborg (PhD Princeton University) is the Fletcher Jones Chair of International Business at the Argyros School of Business and Economics, Chapman University, since 2008. He has been on the faculty of New York University, University of Southern California, Gothenburg University in Sweden and Copenhagen Business School in Denmark. His teaching and research focus on international finance, corporate finance and financial institutions. Publications include numerous articles in scientific journals and books in the areas of international finance, corporate finance and financial regulation. His most recent book is Corporate Decisionmaking with Macroeconomic Uncertainty: Performance and Risk Management, Oxford University Press, 2008, coauthored with Lars Oxelheim. He is a member of the European Shadow Financial Regulatory Committee.

Papers Published in World Economics:

The Euro Crisis

The crisis in Greece and other mainly southern Eurozone countries has been discussed primarily as a fiscal issue. Current account deficits of the same countries have received less attention in spite of the relatedness of current account and fiscal deficits. We argue that the failure of many countries within the Eurozone to develop adequate internal adjustment mechanisms is also an important factor behind the crisis. After reviewing the major perspectives that have been offered on the crisis, we present data that support our argument by demonstrating the lack of price and cost convergence in the Eurozone since 1999. Ironically, it seems that the surplus countries have carried out more of the adjustment pointed to by the endogenous optimum currency area (OCA) theory than the deficit countries. We recommend that the responsibility of a ‘European Debt Surveillance Authority’ should include surveillance of intra-euro payment flows, imbalances and adjustment in labour and goods markets, and setting benchmarks for the Eurozone guarantees of sovereign debt based on ability to adjust internally. Thereby, a potential moral hazard problem of an implicit Eurozone guarantee of countries’ sovereign debt could be avoided.

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