An investment and equality-led sustainable development strategy for Europe
Ozlem Onaran (),
Giovanni Cozzi (),
Thomas Obst () and
Daniele Tori ()
No 16212, Greenwich Papers in Political Economy from University of Greenwich, Greenwich Political Economy Research Centre
Austerity policies coupled with rising inequality in Europe have resulted in a prolonged stagnation and a vicious circle of chronically low demand, slow down in investment and productivity, and economic, social and political instability. In order to end this vicious cycle, Europe needs directed public investment policies accompanied by industrial policy, higher equality, stimulated demand, and regulation of finance and corporate governance. Our research presents strong empirical evidence that expansionary fiscal policy is sustainable when wage and public investment policies are combined with progressive tax policy; the impact is stronger when these policies are implemented in a coordinated fashion across Europe due to strong positive spill over effects on demand. A strong investment performance also requires a process of de-financialization of the economy and a new approach to corporate governance.
Keywords: Public spending; Tax policy; Wage share; Growth; Financialization; Investment; Non-financial sector; Financial development; Social infrastructure; Physical infrastructure; Sustainable development; Europe (search for similar items in EconPapers)
JEL-codes: C23 D22 E12 E22 E25 E62 G31 (search for similar items in EconPapers)
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