[p2p-research] Relative Price Levels in the Euro Area 1995-2009

[Ryan]

What a currency crisis looks like from the perspective of
pricing...some states inflating...others deflating...with one
currency...very difficult to manage.

Sent to you by Ryan via Google Reader: Relative Price Levels in the
Euro Area 1995-2009 via Early Warning by Stuart Staniford on 6/29/10
This graph shows the relative price levels in selected euro area
countries. The PIIGS countries are in solid colors, and Germany is in
heavy black - other countries are dashed. I left off a few of the very
small economies.

You can see the problem - over the last 15 years, costs on the
periphery escalated relative to the big core economies - Germany and
France. Now the area is at risk of deflation - in particular in
Ireland, there was clear deflation in 2009. (There's an interesting
article on the not-too-great effects of Ireland's austerity program in
this morning's NYT).

Here's the same data with the German price level divided out.


It's going to take a while to undo that...

The data are from the IMF World Economic Outlook database.
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