Working Paper: CEPR ID: DP10723
Authors: Antonio Fatas
Abstract: This paper reviews, from a macroeconomic point of view, the agenda for structural reforms in Europe. Structural reforms have been part of the economic policy discussions of European governments since the 70s when economic growth and employment started lagging relative to the US. The global financial crisis has created a sense of urgency because of the low performance of many European economies during the past decade. Our empirical analysis first shows that there exists a strong correlation between policies, institutions and economic performance. We also show that reforms are happening and they are happening faster in the countries that need them the most. However, the speed of reforms is not always fast enough, reforms happen in an isolated manner and their effects are not as large as planned. In addition, we see reforms slowing down possibly because the low-growth environment has not provided the best economic or political environment to support a sustainable process of broad reforms. We conclude with some thoughts on what would take to accelerate the reform process and the potential role of Europe and its institutions.
Keywords: Euro; Europe; Structural Reforms
JEL Codes: E6; O1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| structural reforms (E69) | GDP per capita (O49) |
| structural reforms (E69) | labor market performance (J48) |
| structural reforms (E69) | productivity (O49) |
| structural reforms (E69) | employment rates (J68) |
| lack of structural reforms (E69) | observed gaps in economic performance (P47) |
| policies and institutions (O43) | economic performance (P17) |