Further Austerity and Wage Cuts Will Worsen the Euro Crisis

Corrado Andini and Ricardo Cabral
Authors registered in the RePEc Author Service: Ricardo João Nunes dos Santos Cabral

No 37, IZA Policy Papers from Institute of Labor Economics (IZA)

Abstract: This note argues that the solutions to the euro-area crisis proposed by the EU governing institutions in cooperation with the IMF, based on further austerity and wage cuts, will worsen the crisis. They are unlikely to reduce both sovereign and external debt ratios of countries experiencing these problems. Quite in contrary, they are likely to further reduce the real GDP growth of these countries.

Keywords: euro crisis; austerity; wage cuts (search for similar items in EconPapers)
JEL-codes: E1 E4 E5 E6 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2012-02
New Economics Papers: this item is included in nep-eec
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Citations: View citations in EconPapers (3)

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