How can growth be accelerated in Europe?
This paper deals with economic growth in Europe. The special emphasis is in key institutional factors that are commonly assumed to affect aggregate growth: functioning of labor markets, availability of labor and capital, and the size of government. For more explicit measures, we use the data on profit rates, average working hours, dependency ratios, tax rates and other measures of the size of government (e.g. employment shares), measures of price competitiveness, and finally the structure of production. The data also include the terms of trade, interest rates, and foreign demand as control variables. Empirical analysis makes use of cross-country panel data for EU15 countries for 1971–2010. The results suggest that profitability and competitiveness do indeed constitute the main determinants of growth. However, also other variables like working hours and the size of government appear to affect growth in an important manner. All in all, slowdown of growth in Europe does not appear to be a paradox but at least with some margin something can be done in achieving more ambitious growth rates.
|Date of creation:||24 Oct 2012|
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- Juha Kilponen & Matti Viren, 2010.
"Why do growth rates differ? Evidence from cross-country data on private sector production,"
Springer, vol. 37(3), pages 311-328, July.
- Kilponen, Juha & Viren, Matti, 2008. "Why do growth rates differ? Evidence from cross-country data on private sector production," Research Discussion Papers 13/2008, Bank of Finland.
- Koskela, Erkki & VirÉn, Matti, 2000. "Is There a Laffer Curve Between Aggregate Output and Public Sector Employment," Discussion Papers 737, The Research Institute of the Finnish Economy.
- Snower, Dennis J. & Burmeister, Johannes & Seidel, Moritz, 2011. "Dealing with the eurozone debt crisis: A proposal for reform," Kiel Policy Brief 33, .
- H. Siebert, 2007. "Growth Policy," Chapters, in: Elgar Companion to Neo-Schumpeterian Economics, chapter 59 Edward Elgar.
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