Structural Asymmetries at the Roots of the Eurozone Crisis: What's New for Industrial Policy in the EU?

Botta, Alberto

doi:10.2139/ssrn.2420168

Cited by 13 publications

(11 citation statements)

References 30 publications

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“…The reason for this is both economical and statistical. Some economists (Botta 2014, Constantinescu et al 2015 defend that what we are seeing is not just a cyclical downturn but the result of many macroeconomic and structural imbalances built over time. Consequently, we cannot assume that the crisis is just cyclical and believe that both the European and the global economy will return to its previous levels without major costs.…”

Section: Datamentioning

confidence: 99%

Tree-based approaches for understanding growth patterns in the European regions

Annoni

2016

REGION

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Abstract. We run an empirical analysis to understand the main drivers of economic growth in the European Union (EU) regions in the past decade. The analysis maintains the traditional factors of growth used in the literature on regional growth -stage of development, population agglomeration, transport infrastructure, human capital, labor market and research and innovation -and incorporates the institutional quality and two variables which reflect the macroeconomic conditions in which the regions operate. Given the scarcity of reliable and comparable regional data at the EU level, the starting point of the analysis was devoted to build reliable and consistent panel data on potential factors of growth. Two non-parametric, decision-tree techniques, randomized Classification and Regression Tree and Multivariate Adaptive Regression Splines, are employed for their ability to address data complexities such as non-linearity and interaction effects, which are generally a challenge for more traditional statistical procedures such as linear regression. Results show that the dependence of growth rates on the factors included is clearly non-linear with important factor interactions. This means that growth is determined by the simultaneous presence of multiple stimulus factors rather than the presence of a single area of excellence. Results also confirm the critical importance of the macroeconomic framework together with human capital as major drivers of economic growth. This is overall in line with most of the economic literature, which has persistently underlined the major role of these factors on economic growth but with the novelty that the macroeconomic conditions are here incorporated. Human capital also has an important role, with low-skilled labor supply having a higher detrimental effect than the conducive one of high-skilled labor supply. Other important factors are the quality of governance for most developed economies and, in line with the neoclassical growth theory, the stage of development in particular for less developed economies. The evidence given by the model about the impact of other factors on economic growth such as those on the quality of infrastructure or the level of innovation is more limited and inconclusive. The analysis conclusions support the reinforcement of the EU economic governance and the conditionality mechanisms set in the new architecture of the EU regional funds * The authors are grateful to the members of the Economic Analysis Unit of the Directorate General for Regional and Urban Policy, European Commission, for scientific guidance and helpful discussion throughout the analysis. A special thank goes to Beatriz Torighelli, for her essential input in data collection and preliminary data manipulation, and Marina Mastrostefano, who provided insight and expertise that greatly assisted the research and the interpretation of results. The information and views set out in the publication are those of the authors and do not reflect the official opinion of the European Commission.23 24 P. Annoni, ...

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Section: Datamentioning

confidence: 99%

Tree-based approaches for understanding growth patterns in the European regions

Annoni

2016

REGION

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“…11 When data about the outcome of innovation processes are also considered, France seems to be better placed in the technological hierarchy. This view is supported by data about investments in R&D and employment in scientific and high-tech sectors (Botta, 2014). Second, the post-2008 increase in unemployment and slowdown in potential GDP (i.e.…”

Section: Secular Stagnation and The Dynamics Of Potential Gdpmentioning

confidence: 87%

Secular stagnation and core-periphery uneven development in post-crisis eurozone

Botta

Tippet

2021

Competition & Change

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In this paper, we analyse secular stagnation in the eurozone. We adopt a core-periphery perspective and analyse whether the 2007–2008 financial crisis triggered off diverging dynamics in the growth potential of core and peripheral eurozone countries. We find that secular stagnation affects the whole eurozone but is a much more serious concern in the periphery. Among the components of potential GDP, the NAIRU in particular has diverged since 2008. We find that the increase in the NAIRU is strongly related to demand-side factors such as investment demand and the fiscal policy stance, as well as to the technological level of the economy. Labour market institutions seem to play a relatively minor role, which may also change depending on the level of technological development of an economy. In line with these findings, we argue that reforms in the eurozone should focus on levelling out the core-periphery technological gap via industrial policy, and on the creation of homogenous financial and macroeconomic conditions among member countries, rather than on the generalized deregulation of labour markets.

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“…First, a European industrial policy allowing for development of an export structure with higher added value in countries with a structural deficit would have potentially positive effects on their external balance. This highlights the need to deepen the current debate on the potential benefits of an active industrial policy in Europe, as pointed out by Botta (2014), Mazzucato et al (2015), Andreoni and Chang (2016), Ambroziak (2017), andPeneder (2017).…”

Section: Final Remarksmentioning

confidence: 95%

Is There a Non-Zero Stable Component in the Eurozone’s External Balances?

Carrasco¹

2018

Journal of Economic Integration

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We consider the potential presence of a structural component in the external balance of 12 Eurozone countries. To this aim, we define the Structural Component of the External Balance as the unobservable part of the external balance that is stable or evolves slowly and around which fluctuations occur with a potentially cyclical origin that are corrected in the shortterm. We propose a methodology for obtaining the Structural Component of the External Balance by decomposing the external balance using breakpoint tests, and we contrast this methodology against other methods widely used in the economic literature. Moreover, we investigate the factors that determine the Structural Component of the External Balance of Eurozone countries. According to our results, Belgium, Germany, Luxembourg, and the Netherlands have a structural and persistent surplus, whereas Greece, Portugal, and Spain have structural deficits. Furthermore, our results indicate that export specialization, financial openness, and a government deficit/surplus are the key variables explaining the Structural Component of the External Balance. JEL Classifications: F15, F32, F36

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Structural Asymmetries at the Roots of the Eurozone Crisis: What's New for Industrial Policy in the EU?

Cited by 13 publications

References 30 publications

Tree-based approaches for understanding growth patterns in the European regions

Tree-based approaches for understanding growth patterns in the European regions

Secular stagnation and core-periphery uneven development in post-crisis eurozone

Is There a Non-Zero Stable Component in the Eurozone’s External Balances?

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