Working Paper: CEPR ID: DP8827
Authors: Nicholas Crafts
Abstract: This paper surveys the recent economic history of Western European growth. It concludes that this experience has been disappointing and that further reforms are desirable in many countries. The requirement for reform comes both from achieving 'close-to-frontier' status and from the opportunities provided by the new technological era. The paper goes on to consider the effects that the current crisis may have on medium-term growth rates. The lesson from the 1930s is that, if the current crisis leads to a similarly bad downturn, the policy reaction in terms of greater state intervention will not be conducive to improved growth prospects.
Keywords: catch-up growth; general purpose technology; social capability; supply-side policy
JEL Codes: N14; O52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| inadequate policy reforms (E69) | disappointing growth performance of Western Europe since the mid-1990s (O52) |
| European integration (F15) | growth (O40) |
| poor implementation of policies (D78) | dilution of effectiveness of integration efforts (L15) |
| financial crisis (G01) | risks to long-term growth (F65) |
| financial crisis (G01) | reversal of favorable structural reforms (E69) |
| reversal of favorable structural reforms (E69) | increased state intervention and reduced flexibility in labor markets (J48) |
| financial crisis (G01) | growth trajectories (O41) |