I have always said that either one or two countries leaving the euro or even the euro disappearance will not be the “end of the world”. It will be a negative shock to which economic polices will have to respond. In the same time I also said that by focusing on the negative effects of euro disappearance we forget about the benefits of flexible exchange rates.
Below is a very nice report presenting both.
The main conclusion from the report:
“The experience of emerging market countries after default and devaluation shows that despite sharp, short-term pain, countries are then able to grow without the burden of high debt levels and with more competitive exchange rates. If history is any guide, the European periphery would be able to grow as Asia, Russia and Argentina have.”.