Growth Recovery in Southern Europe : A Dozen Lessons, Old and New
Greece, Ireland, Portugal, and Spain entered a period of severe economic and financial stress in the aftermath of the 2008 crisis. Their collective experience confirmed the primacy of total debt, private or public, in affecting the onset of, depth...
| Main Author: | |
|---|---|
| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/886151478108905259/Growth-recovery-in-southern-Europe-a-dozen-lessons-old-and-new http://hdl.handle.net/10986/25677 |
| Summary: | Greece, Ireland, Portugal, and Spain
entered a period of severe economic and financial stress in
the aftermath of the 2008 crisis. Their collective
experience confirmed the primacy of total debt, private or
public, in affecting the onset of, depth of, and recovery
from economic crises. The year 2010 and the years following
have demonstrated the ways in which policy responses to
crisis-related downturns must be adapted when major
international partners experience simultaneous growth
slowdowns and markets exhibit increased risk aversion. This
paper compares the recovery experience of these countries in
light of recent policy debates and research on the impact of
macroeconomic and structural reforms. It highlights that (a)
the quality of the policies adopted to stabilize economies
in the short run affects growth recovery in the long run;
and (b) macroeconomic policies (fiscal and monetary) are
most effective in supporting growth when they take into
account structural differences between countries and when
policies complement each other. The country experiences
indicate that a holistic view of factors affecting
investment, exports, and employment is needed to understand
the impact of macroeconomic and structural reforms on
output. In the absence of such a holistic view, policy may
neglect to influence the binding constraints to growth. |
|---|