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The Crisis Sensitivity of European Countries and Regions: Stylized Facts and Spatial Heterogeneity

Author

Listed:
  • Stefan P.T. Groot

    () (VU University Amsterdam)

  • Jan L. Mohlmann

    () (VU University Amsterdam)

  • Harry Garretsen

    () (University of Groningen)

  • Henri L.F. de Groot

    () (VU University Amsterdam)

Abstract

This paper investigates the impact of the recent global recession on European countries and regions. We first present several stylized facts as to the heterogeneous impact of the global recession on individual European countries and regions. We then offer an investigation of three main classes of explanations for spatial heterogeneity in the severity of the crisis. The first is the extent to which countries are integrated in the global economy via financial and trade linkages. A second class of potential explanations is found in differences in the institutional framework of countries. A third possible cause why some countries and notably also regions are more affected than others is differences in their sectoral composition. We show that especially variation in the sectoral composition contributes to the variation in the effects of the current crisis, both at the country level and at the detailed regional level across the EU.

Suggested Citation

  • Stefan P.T. Groot & Jan L. Mohlmann & Harry Garretsen & Henri L.F. de Groot, 2011. "The Crisis Sensitivity of European Countries and Regions: Stylized Facts and Spatial Heterogeneity," Tinbergen Institute Discussion Papers 11-071/3, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20110071
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    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "The Aftermath of Financial Crises," American Economic Review, American Economic Association, vol. 99(2), pages 466-472, May.
    2. Rose, Andrew K. & Spiegel, Mark M., 2011. "Cross-country causes and consequences of the crisis: An update," European Economic Review, Elsevier, vol. 55(3), pages 309-324, April.
    3. Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
    4. Valerie Cerra & Sweta Chaman Saxena, 2008. "Growth Dynamics: The Myth of Economic Recovery," American Economic Review, American Economic Association, vol. 98(1), pages 439-457, March.
    5. Prachowny, Martin F J, 1993. "Okun's Law: Theoretical Foundations and Revised Estimates," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 331-336, May.
    6. Philip R Lane & Gian Maria Milesi-Ferretti, 2011. "The Cross-Country Incidence of the Global Crisis," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 59(1), pages 77-110, April.
    7. Sharpe, Steven A, 1994. "Financial Market Imperfections, Firm Leverage, and the Cyclicality of Employment," American Economic Review, American Economic Association, vol. 84(4), pages 1060-1074, September.
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    More about this item

    Keywords

    recession; austerity; Europe; spatial heterogeneity;

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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