Employment-led recovery for Europe: an alternative to austerity

Giovanni Cozzi (), Terry McKinley and Jo Michell

No 14057, Greenwich Papers in Political Economy from University of Greenwich, Greenwich Political Economy Research Centre

Abstract: Employment generation should be a high priority for European policy makers, in particular in light of the extremely high levels of unemployment in many European countries in the aftermath of the globla financial ciris. Using the Cambridge Alphametrics Model (CAM) this paper compare and contrasts two policy scenarios: an austerity scenario and an employment-focuses scenario. In the the austerity scenario we assume taht the current basic direction of austerity policies is maintained through 2030. On the other hand, in the employment-focused scenario we assume increases in government spending, government income and private investmetn as the strategic basis to generate substantial increases in GPD and emplyoment in Europe. Our alternative employment-led recovery scenario also assumes that the European budget will be gradually increased and directed to spur public and private investment across Europe, and particularly in the Eurozone periphery. Results generated by the CAM model for these two scenarios show that European nations would experience significantly higher growth adn employment rates under our alternative expansionary employment-focused scenario.

Keywords: austerity; employment; GDP growth; EU budget; investment; government spending; global financial crisis (search for similar items in EconPapers)
Date: 2014-06-01
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Persistent link: https://EconPapers.repec.org/RePEc:gpe:wpaper:14057

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