Dollar depreciation—Euro pain

摘要

According to U.S. economists the American economy needs a further depreciation of the dollar by 25%. Can the euro accommodate the needs of the U.S. economy? We apply the Fink (1995) scoring model and analyze the country risk of the Euro zone, Bulgaria and Hungary. We find that a further appreciation of the euro is hardly sustainable for the Euro zone. For countries like Bulgaria, which tied their currency to the euro, the risk of a currency crisis is prevalent. We argue that more detailed ECB debt statistics are necessary to gauge the risk inherent in the Euro zone.