 Is Europe Sick?Global Economy Journal, 2005, vol. 5, issue 3, 37 Abstract: Europe's economic performance has deteriorated continuously over the last two decades both in terms of its unemployment and its labor force participation rate; more recently its productivity has declined relative to the United States. This is due to a complex interaction between the how these welfare states are designed, the institutions created by the European Union, idiosyncratic factors resulting from linguistic differences, population dynamics and other cultural factors, and an increasing emphasis on non-economic objectives. Although structural reforms can provide a solution, it will be a long, difficult and costly process. A more successful approach involves a redesign of the macroeconomic framework in Europe. Aggregate demand stimulation should be given priority since it will not only increase employment directly, but, by slightly raising inflation, will allow negative real interest rates and separate real wages movements from nominal wages. More generally, EU institutions appear to have been designed assuming a perfect world; instead these need to be designed around existing national institutions and cultural practices. Keywords: Europe; economic growth; economic policy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bpj:glecon:v:5:y:2005:i:3:n:1 Ordering information: This journal article can be ordered from Access Statistics for this article Global Economy Journal is currently edited by Jannett Highfill More articles in Global Economy Journal from De Gruyter |
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