Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
SlideShare a Scribd company logo

Eurozone after 2008 , monetary and fiscal policies suggested

•Download as PPTX, PDF•
•
Felice Biancardi
Felice Biancardi

It is a short analysis of the effect of the crisis on the Eurozone and the US market growth Moreover, you can find some suggestion about what monetary and fiscal policies should be implemented

1 of 15
Macroeconomic Analysis Eurozone January 2015
Economic Growth • Crisis 2008 • Debt-fuelled boom thanks to low interest rates set by the ECB • Recovery in 2010 • Recession in 2012: paying back debts => uncompetitive Exp • GDP growth is around 1% now, which is still too low for the ECBSource: IMF – World Economic Outlook of October 2014
Inflation • ECB target for inflation in Eurozone is 2-3% • Debt-fuelled boom got inflation back up to a normal rate of 2-3% • Deflation from 2012 up to now Source: IMF – World Economic Outlook of October 2014
Unemployment • Unemployment rate has been rising for the past few years. • 45% of EU’s unemployed have been without a job for more than a year. • Big problem in youth unemployment. Source: IMF – World Economic Outlook of October 2014
Government Net Debt • Debt is very high in Eurozone: Greece, Spain and Portugal have high public debts • These public debts are the foundation of the Eurozone current crisis Source: IMF – World Economic Outlook of October 2014
Government Fiscal Deficit • Government Fiscal Deficit (Revenues – Total Expenditure). • EU rule: countries using the euro can’t have a deficit of more than 3% of GDP. • Spain, Greece and Portugal and other countries have failed to keep to that rule.Source: IMF – World Economic Outlook of October 2014
US vs. Eurozone Growth • US recovered quicker than the EU after the crisis • QE measures more effective than traditional expansionary monetary policy. Source: IMF – World Economic Outlook of October 2014
US vs. Eurozone Inflation Source: IMF – World Economic Outlook of October 2014 • Inflation goal of the US is 2% vs. ECB 2- 3% • Deflation of prices since 2012 but to a lesser extent in the US
US vs. Eurozone Unemployment • Unemployment has been raising in the EU because of rising prices • Obama implemented the “American‘s Job Act” which decreased unemployment in the long run Source: IMF – World Economic Outlook of October 2014
US vs. Eurozone Gov. Fiscal Deficit Source: IMF – World Economic Outlook • The bigger deficit in the Us is caused by the previous expansionary fiscal policy in order to boost the economic growth from 2009 • Eurozone countries who got loans faced the prospect of defaulting
US vs. Eurozone Gov. Net Debt Source: IMF – World Economic Outlook of October 2014 • Austerity measures have slowed down debt levels in the Eurozone • The US spending increased sharply because of the QE
Problem to Solve 1) High Unemployment 2) Deflation ( Sav ; P ; Rev ; U ; Inv ) 3) Economic Growth
Monetary Expansionary Policy Conventional EP not effective Quantitative Easing is more reliable • Abernomics (2012) • US (2009-2013) • LTRO (2011-2012)
QE Effect Effects of QE: – Depreciation Exp ; Imp – More Money Int ; Inv ; C Risks : • Ineffective on Consumption • P of necessary imported goods (petrol)
Fiscal policy 1. 75% coverage of SS for new employers (U ) 1. Tax Incentives for eurozone manufacturing firms (U ) 1. Credit line for strategic goods imports (ex: Petrol)

More Related Content

Eurozone after 2008 , monetary and fiscal policies suggested

  • 2. Economic Growth • Crisis 2008 • Debt-fuelled boom thanks to low interest rates set by the ECB • Recovery in 2010 • Recession in 2012: paying back debts => uncompetitive Exp • GDP growth is around 1% now, which is still too low for the ECBSource: IMF – World Economic Outlook of October 2014
  • 3. Inflation • ECB target for inflation in Eurozone is 2-3% • Debt-fuelled boom got inflation back up to a normal rate of 2-3% • Deflation from 2012 up to now Source: IMF – World Economic Outlook of October 2014
  • 4. Unemployment • Unemployment rate has been rising for the past few years. • 45% of EU’s unemployed have been without a job for more than a year. • Big problem in youth unemployment. Source: IMF – World Economic Outlook of October 2014
  • 5. Government Net Debt • Debt is very high in Eurozone: Greece, Spain and Portugal have high public debts • These public debts are the foundation of the Eurozone current crisis Source: IMF – World Economic Outlook of October 2014
  • 6. Government Fiscal Deficit • Government Fiscal Deficit (Revenues – Total Expenditure). • EU rule: countries using the euro can’t have a deficit of more than 3% of GDP. • Spain, Greece and Portugal and other countries have failed to keep to that rule.Source: IMF – World Economic Outlook of October 2014
  • 7. US vs. Eurozone Growth • US recovered quicker than the EU after the crisis • QE measures more effective than traditional expansionary monetary policy. Source: IMF – World Economic Outlook of October 2014
  • 8. US vs. Eurozone Inflation Source: IMF – World Economic Outlook of October 2014 • Inflation goal of the US is 2% vs. ECB 2- 3% • Deflation of prices since 2012 but to a lesser extent in the US
  • 9. US vs. Eurozone Unemployment • Unemployment has been raising in the EU because of rising prices • Obama implemented the “American‘s Job Act” which decreased unemployment in the long run Source: IMF – World Economic Outlook of October 2014
  • 10. US vs. Eurozone Gov. Fiscal Deficit Source: IMF – World Economic Outlook • The bigger deficit in the Us is caused by the previous expansionary fiscal policy in order to boost the economic growth from 2009 • Eurozone countries who got loans faced the prospect of defaulting
  • 11. US vs. Eurozone Gov. Net Debt Source: IMF – World Economic Outlook of October 2014 • Austerity measures have slowed down debt levels in the Eurozone • The US spending increased sharply because of the QE
  • 12. Problem to Solve 1) High Unemployment 2) Deflation ( Sav ; P ; Rev ; U ; Inv ) 3) Economic Growth
  • 13. Monetary Expansionary Policy Conventional EP not effective Quantitative Easing is more reliable • Abernomics (2012) • US (2009-2013) • LTRO (2011-2012)
  • 14. QE Effect Effects of QE: – Depreciation Exp ; Imp – More Money Int ; Inv ; C Risks : • Ineffective on Consumption • P of necessary imported goods (petrol)
  • 15. Fiscal policy 1. 75% coverage of SS for new employers (U ) 1. Tax Incentives for eurozone manufacturing firms (U ) 1. Credit line for strategic goods imports (ex: Petrol)