 It's a question for Lucrezia, you did document that the Euro area after the crisis performed poorly relative to the U.S., and inside the Euro area there is a surprisingly strong performance on the part of Germany and Greece and Italy underperformed. You said that we all knew why that was so. Since I'm the exception, could you please clarify it for me? Okay, let me turn to the other Vitor. Yes. No, it's a question for both, in fact, because the conclusions of the very paper, as Lucrezia pointed out seem also to be grim because indeed it shows that in spite of the change in current periphery between the two periods, the asymmetries are still there, but I have the doubt that when we look to the adjustment that has happened in the Euro area, what we see is that there has been a huge adjustment not only in terms of fiscal but also external current account, and both our analysis and the IMF analysis show that the bulk of the correction in the current account was structural. It was not because of conjunctural factors or import compressions or no, it's not that. In spite of that huge adjustment now, countries, all countries are growing in the periphery and have done a real adjustment, not just some short-term adjustment that is what we sort of see. Would this mean that this real adjustment now can be considered as something that means that the sort of asymmetries or resilience to shocks has indeed changed in a significant way looking into the future so that your grim conclusion would not be valid? Thank you, Vitor. Next is Dirk. Thank you. It was really an interesting overview and the cross-border flows, but they have not everywhere been the same, and I'm wondering whether you have looked at it, and in some countries and we did together, Ireland, for example, the cross-border flows were very strong, in some other countries it was far less, and do you have a feeling what is really the distinguishing factor, the differences between the countries? Thank you. Janis? Thank you. One question to Barry and to Lucrezia. My experience in Greece is that taking into account the conclusions of the optimal currency areas is that this theory does not take into account the willingness of policymakers to follow the rules of a fixed exchange rate or the optimal currency area. I mean, as we know from history, the gold standard or the Bretton Woods collapsed because countries did not follow, did not have the discipline to follow the rules. I think the same applies today in the euro, and I don't mean only irresponsible policymaking in the European south, but also misunderstandings in the European north. So how important is this element, Barry? I mean, in Greece, as we know, okay, financial flows were to not trade the good sectors, but that was not the cause of the crisis. It was mostly the irresponsible fiscal policy which created bubbles in the public sector that led also to a huge current account deficit. So it was the irresponsible fiscal policy rather than the financial flows. Thank you. Patrick Cohnhan? Thank you. My question for Barry also. So you took us through this idea that there's a supply shock, triggering a demand shock, and that this was something unanticipated in the previous literature. What I would like to understand is, do you think this is a new intrinsic dynamics of the monetary union, or is it just that there was this exogenous surge in financial globalization at the same time, and we don't expect to see it again? Okay, thank you. John Neal Bauer? In 1998, I wrote a piece on asymmetries in the eurozone, pointing to the problems of housing market asymmetries, housing and credit market asymmetries, and Spain, Ireland, certainly, and the UK. If the UK had joined, we would have had similar problems to Spain and Ireland. That was part of the issue, but it seems to me the Greek and the Italian problem are much more a problem of failed governance. It's the political process which is so dysfunctional in those economies. Thank you. Bernard? So, John reminded us yesterday of the important to distinguish the structural break from cyclical factors. The great sense said the first shock of the euro existence was Lehman. The first shock was actually the introduction of the euro itself. My question is about the role of stop-flow adjustment and the balance of payments. If we go back to that paper, when Spain and Portugal had current account balances in excess of 10%, is that to be seen as a one-off adjustment also in asset prices to the introduction of the euro, which was then reversed in 2008, or was it sort of a change in the correlations within the euro area? Okay. Thank you. That was a great set of comments and questions. So maybe first you look crazy just because you had a specific question, and then to Barry. Okay. Yes. Okay. Vittor. Vittor. Well, I mean, I have some conjecture. So I think in Italy, the question I would agree is not that Italy didn't have the boom and bust narrative. Okay. So this is why I wanted to, you know, to flag it. It's more about the structural and it actually is a story that precedes the euro. I mean, if you study the, you know, Italy moved together with Germany with the core of European countries until the mid-90s. And then since the mid-90s started diverging. So a lot of, I mean, I can tell you a long story is about that. It is about, you know, our corporate sectors, the difficulties on joining the, you know, information communication technology and so on. But a lot is also fiscal. Italy, you know, had primary services between two and five percent for about, I don't know, 25 years, 30 years. I mean, it's crazy. So it's this combination. Okay. And of course, governance, et cetera. Now for Greece, you can probably say similar stories, although Greece had a boom. Okay. So that in Greece, okay. Greece is Greece. Okay. Let me allow me to say Greece is Greece. Now Germany, I think is much more controversial. Okay. So why Germany was such a big winner? Now I know that the MF has done studies by looking at, you know, the initial exchange rate and competitiveness shock. And I think that if you look also at market shares in Italy and Germany, which share a lot of similarities in the structure of the manufacturing sector, you know, export-driven economies, Italy was a big loser with respect to Germany. And I think this has been fully documented by, you know, MF papers and so on. So that's one thing. And on Victor, the other Victor, all countries, I agree with you. I mean, I think there has been this incredible development. And in fact, you can see it in my chart. They're all back. Okay. So and now is this going to happen? Are they going to be vulnerable in the future? It's not obvious, but I think that levels of, initial levels of income per capita matters because, you know, some of these countries, they still have to converge. And convergence is a tricky thing. Okay. Because a lot of, you know, if you look at Spain this has been done through, you know, has been coupled with financial fragility. So we have to watch. Okay. So we have to have the good convergence and not the bad convergence. So that's a policy thing. Okay. Thank you, Lucrecia. Barry? Thank you to Lucrecia for her comments and observations. She emphasized the importance of distinguishing the post-global financial crisis period from the years that came before. I'm sympathetic and principled. It turns out not to be so important in practice for the exercise that we undertake in this paper. We find basically the same thing when we cut the data set in 2008 as we do when we roll it forward by the better part of a decade. An important caveat here is that when we do the estimates, we look at the whole period. When we look at the correlations across countries, we leave out 2009 because everybody is hit by a very large shock. 2009 is a big, big outlier for all the countries and you'd get very high positive correlations across the board if you include that data point. It shows up as a big negative aggregate demand shock and a smaller negative aggregate supply shock in the time series. We leave it out when we do the correlations. Lucrecia's interesting exercise was a different perspective from ours on the evolution of the constituent member states of the monetary union because her question is from a trend rate of growth point of view who did better and who did worse. It's logical that she should break the set of countries down into different subgroups but I think there is an interesting substantive question because do we think that the members of a monetary union need to grow at similar rates on trend? Is that important for the smooth functioning of a monetary union? Do we need to see real convergence in terms of faster growth rates in countries that start out behind or not? So we have historically seen catch-up growth in the poor regions within the United States and we don't see that now anymore. We have a variety of strains in the U.S. I'm not sure whether or not this is the source of some of them. Vitor Constancio asked about how grim my conclusions are. On the one hand they are grim, on the other hand they are not the two-handed economists argument. On the one hand we do not find evidence of faster speed of adjustment in Europe so you can estimate a vector auto regression, you can shock it, you can look at the impulse response and say how many periods, how many years does it take to complete 90% of the eventual adjustment and we're not seeing faster adjustment in that sense in our data than we did earlier on. There are hints of slower adjustment within the United States which would be consistent with the idea that labor mobility has declined in the U.S. because of housing market related factors and potentially others. The positive, the less grim interpretation of the results is that everything we found is consistent with the high importance of banking union to accompany monetary union and Europe as we heard yesterday has made significant progress in the direction of banking union. If bank supervisors take these cross-border financial repercussions into account when setting regulations one can hope that their impact would be less and to Dirk know we haven't looked yet at differences across member states in the impact of these financial flows. Finally to Patrick, are the shocks that we saw in the data intrinsic to monetary union or were they simply a corollary of financial globalization and now that financial globalization is moving in reverse there's less reason to worry. The differences across economies that we see are consistent in our minds with the idea that it's monetary union the perceived reduction the perceived elimination of exchange risk within the Euro area prior to 2008 that drove these financial flows and correlations. You don't see the operation of financial factors to the same degree all across the Euro area but you seem to see them dramatically in economies that came into the Euro in 1999 with high interest rates high spreads relative to the core. Great. Thank you Barry. So let's turn to the second paper in the sessions of Paul.