After the crisis : reform, recovery, and growth in Europe

__After the Crisis__ reassesses the twin projects of structural reform and European integration in the wake of the Great Recession and the European Sovereign Debt Crisis. The introduction compares the pre-crises debate to the current situation, and highlights a number of ways in which both reform and further integration may have become more difficult. Chapter 1 surveys the state of the structural-reform agenda, its successes, failures, and priorities for further action. The second chapter focuses on the fiscal-policy response to the crisis and advocates a greater balance between supply-side reforms and demand-side management. The third chapter focuses on the asymmetric shocks across economies in the monetary union, and discusses institutional mechanisms to reduce their frequency and impact. Chapter 4 examines the cyclical behavior of output and financial indicators, as well as the counter-cyclical role of macro-financial policies, both at the national and the European level. The fifth chapter studies changes in Europeans' attitudes, showing how the recent crises have eroded public confidence in European institutions. The sixth chapter tackles the demographic challenges facing Europe, and particularly the way that demographic change may impact the reform agenda. Chapter 7 highlights the under-appreciated extent to which 'Europe', taken as a whole, is characterized by a substantial amount of inequality and geographical income clustering, and the challenge this poses for further integration. Cover 1 After the Crisis; Reform, Recovery, and Growth in Europe 4 Copyright 5 Foreword 6 I. What Type of Economic Growth Model for Europe? 7 What Should Be Our Goal? 7 What Are the Constraints on Achieving this Goal? 7 Which Strategy Should we Adopt? 8 II. Which Reforms to the European Governance Model are Necessary? 9 Contents 12 List of Figures 14 List of Tables 18 List of Contributors 20 Introduction: Structural Reform and European Integration After the Crisis 22 A Crisis Too Many? 22 Threats to Further Structural Reform 24 European Integration: Deeper, Unravelling, Political? 25 One Or The Other? 26 1: The Agenda for Structural Reform in Europe 27 1.1. Introduction 27 1.2. How Far is Europe from Its Potential? 28 1.2.1. Distance to the Frontier 28 1.2.2. Living Standards (GDP per Capita) 29 1.2.3. Productivity (GDP per Hour) 30 1.2.4. Labour Market and Demographics 31 1.2.5. Long-term Trends 37 1.3. Convergence, Steady State, and Structural Reforms 41 1.4. Measuring Structural Gaps in Policies 43 1.4.1. Doing Business (World Bank) 43 1.4.2. Product and Labour Market Indicators (OECD) 45 1.4.3. Additional Policies and Potential Reforms 50 1.5. The Pace of Reform 51 1.6. The Benefits of Reform 55 1.7. Conclusion: An Agenda for Reforms in Europe 60 1.8. References 63 1.9. Data Sources 66 2: Crisis Management and Economic Growth in the Eurozone 67 2.1. Introduction 67 2.2. Eurozone Stagnation: Supply or Demand Problem? 67 2.3. Structural Rigidities and Growth: An Econometric Analysis 69 2.4. Survey of the Literature 76 2.5. Growth and Macroeconomic Imbalances 79 2.6. What Should Be Done? 86 2.7. Conclusion 89 2.8. Appendices 90 2.9. References 91 3: Dealing with EMU Heterogeneity: National Versus European Institutional Reforms 94 3.1. Introduction 94 3.2. Asymmetric Shocks: The Revenge of the Optimum Currency Area? 96 3.3. Exposure to Asymmetric Shocks 98 3.4. Adjustment to asymmetric shocks 103 3.5. Conclusion 107 3.6. References 108 4: Macro-Financial Stability Under EMU 110 4.1. Introduction 110 4.2. Empirical Analysis 113 4.3. Policy Reforms 123 4.4. Conclusions 126 4.5. References 127 5: Demographics and the Secular Stagnation Hypothesis in Europe 130 5.1. Introduction 130 5.2. The Demographic Scenario for Europe 131 5.3. Demographic-Based Projections for Output and Real Interest Rates 140 5.3.1. Demographic Structure and Real Rates: Some Further Evidence 146 5.4. Age Structure, Productivity, and Labour Markets 149 5.4.1. Data Description 152 5.4.2. Results 153 5.5. The Political Economy of the Age Structure of Population 158 5.6. Conclusions 163 Acknowledgements 164 5.7. Appendix 164 A.5.1. Data Sources 164 A.5.2. Identification and Estimation of the Lee–Carter Model 164 5.8. References 165 6: The Crisis, the Public, and the Future of European Integration 167 6.1. Analytical Perspectives and Expectations 169 6.2. Views on European Integration: An Overview 172 6.3. Views on European Integration: A Statistical Analysis 183 Acknowledgements 190 6.4. References 190 7: The Challenge of European Inequality 192 7.1. Introduction 192 7.2. Data 195 7.2.1. European Data 195 7.2.2. American Data 196 7.2.3. Sample Characteristics 197 7.3. Market Inequality in Europe and the USA 198 7.3.1. Overall Inequality 198 7.3.2. Geographic Income Clusters 199 7.3.3. The Relation between Inequality and Average Income 202 7.4. Redistribution 204 7.5. Changes Over Time 208 7.6. Conclusions 212 Acknowledgements 212 7.7. Appendix 212 7.8. References 213 Index 216 This Volume Discusses The Way Forward For European Countries As They Face The Challenges Of A Period Of Protracted Growth In The Wake Of The Economic And Sovereign Debt Crisis. Edited By Francesco Caselli [and Two Others]. Includes Bibliographical References And Index. The volume discusses the way forward for European countries as they face the challenges of a period of protracted growth in the wake of the economic and sovereign debt crisis.