How's the future of the Eurozone economy look like?
Saturday, April 30, 2016
A Long, Uneven Recovery in Europe
The economy in Europe is finally got back where it used to be before the global recession in 2008. It has made progress since the crisis, but the European businesses continue to face challenges. China has taken up about 10 percent of Europe's exported wares last year. Increase in aging population is another problem that will further restrict the Eurozone economy.
How's the future of the Eurozone economy look like?
How's the future of the Eurozone economy look like?
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Comparing the Eurozone to the US is very interesting. Obviously the Eurozone overall experienced the crisis much worse than US, but why was that? Was it their inability to enact monetary policy due to the shared currency and ECB? This could help explain why the UK is doing better than average, but they still aren't among the most successful countries. Was it the harsher austerity measures? Or was it some other policies or something structural about Europe in place beforehand? What do you guys think?
ReplyDeleteI think the main issue was the fact that European countries that are part of the Eurozone. There are other countries in Europe such as the United Kingdom that have their own currency and central bank. It would be interesting to see how these countries compare to European countries with their own central banks. However, I cannot find any data. My hunch is they were able to recover quicker. As for Greece, it has preexisting problems before it joined the Eurozone.
Deletehttps://www.washingtonpost.com/news/wonk/wp/2015/07/05/as-greece-votes-heres-everything-you-need-to-know-about-the-nations-crisis/
DeleteThe graphs in this article show just a few of the many reasons why Greece hasn't been able to recover. The figure I find most striking is that 89.5% of tax receipts went uncollected in Greece in 2010!!!
I think Anthony is absolutely right that Greece is so bad for some other structural issues that they have been dealing with for awhile. This crisis was a huge blow for Greece, but there were some serious issues already there that this acted as a catalyst for.
DeleteTo Kenny's point, I just looked into the UK situation and they actually haven't even hit their pre-recession peak yet, which would put them below the Eurozone average (I was mistaken in my first post when I said their recovery was above average for Europe). So in that instance the ability to control monetary policy didn't actually yield better results, even if it probably did help on the margin.
I think it has a lot to do with the fact that there are significant economic problems in some of their countries (Spain, Portugal, Ireland, Greece, Italy) that aren't entirely related to the recession. The lack of monetary policy is also a contributing factor, but there were structural problems within the countries that I listed above that have prevented the growth of the Eurozone as a whole. The Eurozone doesn't have enough power over the economies of its nations, so it's hard to ensure that they'd all be able to survive a global recession.
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