The post-pandemic recovery – why is the euro area growing more slowly than the United States?

Malin Andersson, Cristina Checherita-Westphal, António Dias Da Silva and Michel Soudan
Authors registered in the RePEc Author Service: Cristina Checherita Westphal

Economic Bulletin Boxes, 2024, vol. 4

Abstract: Growth has been notably weaker in the euro area than in the United States for decades. This box considers several factors that have contributed to the difference observed since the start of the pandemic, reflecting the fact that the euro area has seen less of a stimulus from private consumption, coupled with weaker labour productivity growth. The euro area has also felt a greater impact from the pandemic and Russia’s war against Ukraine. There is mixed evidence of the monetary policy impacts on activity in these two regions, albeit spillovers from the United States to the euro area appear larger than in the other direction. With regard to differences in fiscal policy, while accurate comparisons are difficult to draw, the fiscal policy impulse over 2020-23 was relatively similar in the two regions, whereas the overall level of the budget deficit was much larger in the United States. JEL Classification: E21, E24, O47, E62, E52

Keywords: consumption; fiscal and monetary policy; GDP; labour productivity; saving (search for similar items in EconPapers)
Date: 2024-06
Note: 427284
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbbox:2024:0004:1

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