15 Dec 2011

The Enduring Popularity of the Euro throughout the Crisis

Felix Roth / Lars Jonung / Felicitas Nowak-Lehmann D.

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This paper analyses the evolution of public support for the euro from 1990 to 2011, using a popularity function approach, focusing on the most recent period of the financial and sovereign debt crisis. Exploring a huge database of close to half a million observations covering the 12 original euro area member countries, we find that the ongoing crisis has only marginally reduced citizens’ support for the euro – at least so far. This result is in stark contrast to the sharp fall in public trust in the European Central Bank. We conclude that the crisis has hardly dented popular support for the euro while the central bank supplying the single currency has lost sharply in public trust. Thus, the euro appears to have established a credibility of its own – separate from the institutional framework behind the euro.
Felix Roth is a Research Fellow at CEPS and the University of Göttingen; Lars Jonung is with Lund University and the Swedish Fiscal Policy Council; Felicitas Nowak-Lehmann D. is at University of Göttingen.