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Europe: How Deep Is a Crisis? Policy Responses and Structural Factors Behind Diverging Performances

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Author Info

  • Fitoussi Jean Paul

    (Sciences Politiques)

  • Saraceno Francesco

    (OFCE - Center for Research in Economics of Sciences Po, Paris)

Abstract

The effects of the current crisis on the level of output, and consequently on unemployment and poverty, are likely to be deep and long lasting; they should not be underestimated, especially now that some timid signs of recovery are appearing. The crisis was triggered by the US financial sector, but its roots are real, and can be traced to the deepening income inequality of the last three decades, which led to a chronic deficiency of aggregate demand. In the Unites States, the center of the crisis, the policy reaction has been bold, and as a consequence the effects of the crisis are less important than in the eurozone, where only France has a comparable performance. The policy inertia of the eurozone countries, in fact, is more structural, and is related to the institutions for the economic governance of Europe. The statute of the ECB and the Stability and Growth Pact, that reflect a doctrine opposed to discretionary macroeconomic policies, constrain eurozone governments and its monetary policy. The relatively better performance of France can in fact be explained with these lenses: on one side it has a well developed system of automatic stabilizers, and on the other it suffered less than other OECD countries the deepening of income inequality.

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Bibliographic Info

Article provided by De Gruyter in its journal Journal of Globalization and Development.

Volume (Year): 1 (2010)
Issue (Month): 1 (January)
Pages: 1-19

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Handle: RePEc:bpj:globdv:v:1:y:2010:i:1:n:17

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Web page: http://www.degruyter.com

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. L’Inégalité Nuit-elle à la Performance Economique ?
    by saraceno in OFCE le blog on 2012-10-12 14:18:45
  2. Does inequality hurt economic performance?
    by laurence-df in OFCE le blog on 2012-10-15 13:17:59
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Cited by:
  1. L, Agnello. & R, M. Sousa., 2012. "How does Fiscal Consolidation Impact on Income Inequality?," Working papers 382, Banque de France.
  2. Joseph E. Stiglitz, 2011. "Rethinking Macroeconomics: What Failed, And How To Repair It," Journal of the European Economic Association, European Economic Association, vol. 9(4), pages 591-645, 08.
  3. Jean-Paul Fitoussi & Francesco Saraceno, 2010. "Inequality and macroeconomic performance," Sciences Po publications 2010-13, Sciences Po.
  4. Luca Agnello & Ricardo M. Sousa, 2011. "How do Banking Crises Impact on Income Inequality?," NIPE Working Papers 30/2011, NIPE - Universidade do Minho.
  5. Julio Lòpez Gallardo, 2012. "Una riconsiderazione degli studi da Kalecki sull'economia statunitense," Moneta e Credito, Economia civile, vol. 65(257), pages 59-81.
  6. Semih Tumen, 2013. "The Impact of the 2008 Crisis on Top Labor Incomes in Turkey: A Nonparametric Analysis," Economics Bulletin, AccessEcon, vol. 33(2), pages 1269-1282.
  7. Luca Agnello & Ricardo M. Sousa, 2011. "Fiscal Consolidation and Income Inequality," NIPE Working Papers 34/2011, NIPE - Universidade do Minho.
  8. Perugini, Cristiano & Hölscher, Jens & Collie, Simon, 2013. "Inequality, credit expansion and financial crises," MPRA Paper 51336, University Library of Munich, Germany.
  9. repec:spo:wpecon:info:hdl:2441/46mbanhapncmp6s9g2choh4pj is not listed on IDEAS

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