Growth effects of structural reforms in Southern Europe: the case of Greece, Italy, Spain and Portugal

Abstract

Economic Papers are written by the Staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The Papers are intended to increase awareness of the technical work being done by staff and to seek comments and suggestions for further analysis. The views expressed are the author's alone and do not necessarily correspond to those of the European Commission.

The Political Economy of Economic Adjustment Programs in the Eurozone: A Detailed Policy Analysis

“…Sound fiscal policies are considered essential to sustain recovery, provide policy flexibility against new economic shocks, and avoid primary fiscal deficits. Last, there is a need to speed up structural reforms (Vogel ) in diversified sectors such as health, pensions, and protected professional activities, as well as to increase the flexibility of labor and product markets (Bouis and Duval ) targeting positive results on growth, employment, and productivity (D'Auria et al . ; Varga, Roeger, and Veld ). Structural policies thus seem to gain an important, although not equal, status to fiscal stabilization to sustain the potential of growth prospects and to foster private demand.…”

Welfare and inequality effects of debt consolidation processes: the case of Spain, 1996–2007

“…For Spain, Burriel et al (2010) estimate γ = 1.8 which corresponds to a wage elasticity of labour supply around 0.56. Varga et al (2014) also use a similar value and set γ = 2.5. The parameter ζ is set in order to match an average labour supply of around 0.3 (ζ = 9.145).…”

Achieving Dynamism in an Anaemic Europe

“…In order to deleverage debt in both the private and public sectors, Member States have adopted several measures which have produced non-negligible adverse nearterm effects on economic activity (Varga et al 2013). In particular, the need to encourage moderate wage developments or even a so-called 'internal devaluation', has had inevitable negative consequences on domestic demand.…”

“…The crisis made it all the more urgent to launch structural reforms aimed at enhancing potential growth and making national economies more resilient and responsive to the challenges of the global economy (Varga et al 2013). The ECB now has a firmer commitment to address adverse shocks and can use an expanded arsenal of monetary weapons if deemed necessary.…”