Adjustment was painful: in a monetary union, the channel of adjustment to shocks is internal through changes in domestic wages and prices. The scope for external adjustment through changes in exchange rates is limited, as exchange rates are fixed among the members of a currency union.
685–709; Steven J. Davis and Till von Wachter (2011), “Recessions and the Costs of Job Loss (PDF),” Brookings Papers on Economic Activity, Fall, pp.