Further Austerity and Wage Cuts Will Worsen the Euro Crisis
This note argues that the solutions to the euro-area crisis proposed by the EU governing institutions in cooperation with the IMF, based on further austerity and wage cuts, will worsen the crisis. They are unlikely to reduce both sovereign and external debt ratios of countries experiencing these problems. Quite in contrary, they are likely to further reduce the real GDP growth of these countries.
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676, Barcelona Graduate School of Economics.
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- Jacopo Ponticelli & Joachim Voth, 2011. "Austerity and anarchy: Budget cuts and social unrest in Europe, 1919-2008," Economics Working Papers 1342, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2012.
- repec:ebl:ecbull:v:6:y:2008:i:25:p:1-11 is not listed on IDEAS
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- Olivier Blanchard, 2007. "Adjustment within the euro. The difficult case of Portugal," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 6(1), pages 1-21, April.
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