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Europe's growth emergency

  • Zsolt Darvas
  • Jean Pisani-Ferry

The European Union growth agenda has become even more pressing because growth is needed to support public and private sector deleveraging, reduce the fragility of the banking sector, counter the falling behind of southern European countries and prove that Europe is still a worthwhile place to invest. The crisis has a similar impact on most European countries and the US: a persistent drop in output level and a growth slowdown. This contrasts sharply with the experience of the emerging countries of Asia and Latin America. Productivity improvement was immediate in the US, but Europe hoarded labour and productivity improvements were in general delayed. Southern European countries have hardly adjusted so far. There is a negative feedback loop between the crisis and growth, and without effective solutions to overturn the crisis, growth is unlikely to resume. National and EU level policies should aim to foster reforms and adjustment and should not risk medium term objectives under the pressure of events. A more hands-on approach, including industrial policies, should be considered. Earlier versions of this Policy Contribution were presented at the Bruegel-PIIE conference on Transatlantic economic challenges in an era of growing multipolarity, Berlin, 27 September 2011, and at the BEPA-Polish Presidency conference on Sources of growth in Europe, Brussels, 6 October 2011.

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Paper provided by Bruegel in its series Policy Contributions with number 623.

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Date of creation: Oct 2011
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Handle: RePEc:bre:polcon:623
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  1. Carmen M. Reinhart & M. Belen Sbrancia, 2011. "The Liquidation of Government Debt," BIS Working Papers 363, Bank for International Settlements.
  2. Zsolt Darvas & Jean Pisani-Ferry & André Sapir, 2011. "A Comprehensive Approach to the Euro-Area Debt Crisis," Working Papers 1101, Department of Mathematical Economics and Economic Analysis, Corvinus University of Budapest.
  3. André Sapir & Philippe Aghion & Giuseppe Bertola & Martin Hellwig & Jean Pisani-Ferry & Bernard Lange & José Viñals & Helen Wallace & Marco Buti & Mario Nava & Peter Smith, 2004. "An agenda for a growing Europe: the Sapir report," ULB Institutional Repository 2013/8070, ULB -- Universite Libre de Bruxelles.
  4. Benedicta Marzinotto, 2011. "A European fund for economic revival in crisis countries," Policy Contributions 504, Bruegel.
  5. Benedicta Marzinotto & Guntram B. Wolff & Mark Hallerberg, 2011. "How effective and legitimate is the European semester? Increasing role of the European parliament," Working Papers 612, Bruegel.
  6. Brenke, Karl & Rinne, Ulf & Zimmermann, Klaus F., 2011. "Short-Time Work: The German Answer to the Great Recession," IZA Discussion Papers 5780, Institute for the Study of Labor (IZA).
  7. Carmen M. Reinhart & Kenneth S. Rogoff, 2011. "A Decade of Debt," NBER Working Papers 16827, National Bureau of Economic Research, Inc.
  8. Reinhart, Carmen & Kirkegaard, Jacob & Sbrancia, Belen, 2011. "Financial repression redux," MPRA Paper 31641, University Library of Munich, Germany.
  9. André Sapir & Jean Pisani-Ferry, 2010. "Whither Growth in Central and Eastern Europe ?Policy Lessons for an Integrated Europe," ULB Institutional Repository 2013/174279, ULB -- Universite Libre de Bruxelles.
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