Europe's Growth Emergency

Zsolt Darvas and Jean Pisani-Ferry ()
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Jean Pisani-Ferry: Director of Bruegel

No 1144, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: Highlights: The European Union growth agenda has become even more pressing because growth is needed to support public and private sector deleveraging, reduce the fragility of the banking sector, counter the falling behind of southern European countries and prove that Europe is still a worthwhile place to invest. The crisis has had a similar impact on most European countries and the US: a persistent drop in output level and a growth slowdown. This contrasts sharply with the experience of the emerging countries of Asia and Latin America. Productivity improvement was immediate in the US, but Europe hoarded labour and productivity improvements were in general delayed. Southern European countries have hardly adjusted so far. There is a negative feedback loop between the crisis and growth, and without effective solutions to deal with the crisis, growth is unlikely to resume. National and EU-level policies should aim to foster reforms and adjustment and should not risk medium-term objectives under the pressure of events. A more hands-on approach, including industrial policies, should be considered.

Keywords: economic growth; deleveraging; productivity; convergence; economic adjustment; structural reform scoreboard; composition of fiscal adjustments; growth policy under constraints (search for similar items in EconPapers)
JEL-codes: E60 F43 O40 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2011-12
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Europe's growth emergency (2011)
Working Paper: Europe’s Growth Emergency (2011)
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