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Presentation paolo manasse
Presentation paolo manasse
Presentation paolo manasse
Presentation paolo manasse
Presentation paolo manasse
Presentation paolo manasse
Presentation paolo manasse
Presentation paolo manasse
Presentation paolo manasse
Presentation paolo manasse
Presentation paolo manasse
Presentation paolo manasse
Presentation paolo manasse
Presentation paolo manasse
Presentation paolo manasse
Presentation paolo manasse
Presentation paolo manasse
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Presentation paolo manasse

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AGORA Economic Conference …

AGORA Economic Conference
4th Athens Biennale 2013
12/10/13

Published in: Economy & Finance, Travel
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  • 1. Paolo Manasse University of Bologna, Italy Athens, Biennale, 12 October 2013 with Isabella Rota Baldini, forthcoming on CEPR Policy Insight Discussion Paper and Voxeu.org
  • 2. 1. 2. 3. 3. 4. 5. The Eurozone, unlike the US, is not recovering from the crisis (persistence) Some countries are more vulnerable than others (heterogeneity): Why? «Demand shocks» - Fiscal austerity (the Troika) - Credit crunch (Sovereign default) «Supply Factors»: - Wage and Price rigidities «EU Institutions»: Europe’s «upside down» What should be done?
  • 3. Cumulative growth in GDP pc 0.06 0.04 0.02 0 -0.02 -0.04 -0.06 0 2 4 6 8 10 12 Cumulative growth in GDP pc Figure 3.2: More Divergence in USA Figure 3.1: Less Convergence in Eurozone 0.08 0.035 0.03 0.025 0.02 0.015 0.01 0.005 0 -0.005 10 Eurozone 11 11.5 Initial per capita GDP Initial per capita GDP 2007-2000 10.5 2000-2007 2012-2007 USA 2007-2012 12
  • 4. Figure 6.1: Divergence of unemployment in Eurozone Figure 6.2: Divergence of unemployment in US 10 5 0 -5 0 5 10 15 Ave Unempl. 2000-08 Eurozone 20 5 4 3 2012-2008 15 Cumulative increase in unemployment Cumulative increase in unemployment 2012-2008 20 2 1 0 -1 0 USA 2 4 6 Ave Unempl. 2000-08 8
  • 5. 0.15 0.1 0.05 2008-12 Cumulative pc GDP Growth Figure 5: TFP and crisis in the Eurozone 0 -0.05 -0.1 -0.15 -0.2 -0.1 0 0.1 0.2 0.3 cumulative TFP growth 2000-08 0.4
  • 6. Deficits Debts
  • 7. Cumulated change in pc GDP 09-12 Figure 10: Fiscal Adjustment and pc GDP in Eurozone 20 15 10 5 0 -5 -10 -15 -20 -25 -2 0 2 4 6 Cumulated Change in the Budget/GDP 2009-12 8
  • 8. Table 1: Net contributions to the EU budget Net contribution (€ % GDP Millions) Belgium -1369 -0,36 Bulgaria 725 1,94 Czech Republic 1455 1,01 Denmark -836 -0,34 Germany -9002 -0,34 Estonia 350 2,31 Ireland 383 0,31 Greece 4622 2,22 Spain 2994 0,29 France -6405 -0,31 Italy -5933 -0,38 Cyprus 6,8 0,04 Latvia 731 3,62 Lithuania 1368 4,63 Luxembourg -75 -0,24 Hungary 4418 4,67 Malta 67 1,15 The Netherlands -2213 -0,36 Austria -805 -0,27 Poland 10975 3,10 Portugal 2983 1,81 Romania 1451 1,08 Slovenia 490 1,40 Slovak Republic 1160 1,71 Finland -652 -0,34 Sweden -1325 -0,33 UK -5565 -0,32 Source: Eu commission, 2011 data Country
  • 9.      No Budget for Stabilization against aggregate shocks/ No Redistribution-insurance Fiscal Policy at country level + ineffective contraints (GSP, fiscal compact) Bail-out system: costly and ineffective (ex-post) No Debt restructuring mechanism (Threat of Exit)
  • 10. Each Country: Fix Supply Side: Restore convergence and resilience - reduce market power of firms and unions, banks (supervision /regulation); improve productivity growth Fix Demand Side: - Budget Deficit (Corruption, Burocracy, Political Fragmentation and Electoral Rules, Fiscal Rules) 
  • 11. EU architecture  EU Budget for Stabilization/Insurance (e.g.backed by VAT)  Fiscal Rules at country level (No Troika, please) + No bail out commitment  Debt restructuring mechanism Difficult! But alternative is Euro disintegration: risks of widespread insolvencies, competitive devaluations, restrictions on movements of goods, services, people

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