The Value of the Euro

Brad Setser and Europe's role in the Global Imbalance:

I long argued that Europe has done more to contribute to "global balance of payments adjustment" than American critics of Europe's slow growth typically acknowledge. Europe's hasn't grown fast (setting frothy Spain aside), but it has let its exchange rate adjust. And that counts.

To over-generalize:

Emerging Asia = solid growth and no exchange rate moves. China being the main example.

Europe = slow growth and big exchange rate moves.

And generally speaking, US exports to Europe have grown faster than US exports to emerging Asia over the past few years despite Europe's far slower growth. Exchange rates matter, not just growth differentials. The fall in the dollar against the euro between 2002 and 2004 also helps the US in other markets.