In its essence, Structural Reform is simply changing the way the Government does things. It is the change of the policies that they enforce in order to become more economical. In countries where governments are more developed, structural reform is subtle. They are usually small changes of minimal costs which will give a greater return in the future. Italy for example has made the labour force slightly more accessible. Firms can now “hire up to 20% of their workforces on fixed-term contracts of up to three years” (C.W., 2014) It is easier to implement small structural reforms when an economy is doing well or even thriving.
The real task is implementing reforms to a struggling economy. This is where the structural reforms are put to
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(Praet, 2105) This is clearly shown in the Peter Praet paper on Structural reforms and long-run growth in the euro area. It is virtually impossible for any structure to be applicable to each individual economy. Each country has their own unique financial difficulties and cultures. Structural reform should be a basis of which each individual economy manufactures what suits them best. For structural reform to be successful it must be tailored to National conditions. In the EU, there is considerable spill over for countries who do not participate in continental structural reform. It results in the EU being slower to unexpected shocks – big or small – and therefore once again stunts growth across the entirety of the organisations. (Rubio, 2014) The stability and growth pact is the initiative to reinvigorate growth in the economy. Yet, it fails to fully recognise the issues each individual country has in implementing these rules and regulations. (Rubio, …show more content…
By doing this it allows the economies to become more reliable and better able to deal with shocks. Increasing the rate of recovery in output will allow economies to reallocate resources quicker which in the long run will mean less time wasted and more money put into the expansion of growth in said economy. The euro as a whole does not have an independent monetary policy or an independent exchange rate. This is a crucial issue which needs to be looked upon by the government in the near future. Due to this lack of independent structure, it is of vital import that the euro becomes more susceptible to shocks – whether they be large or small – to ensure that the economy remains stable throughout tough economic times. Being a member of the monetary union ensures a “higher degree of resilience” for each participating country. (Praet, 2105) By countries in the EU opting out of this monetary policy it weakens the economy as a whole. It makes countries who participate in this policy more vulnerable to a severe economic downturn due to the fact that they cannot adjust to shocks as quickly. This is due to the “spill over” of unemployment and lack of investments of countries not enforcing said polices. (Praet, 2105)
When looking at the long-run growth of an economy, fixed wages has been proved to be negative overall. Fixed wages in an economic downturn leads to a higher rate of unemployment. (Praet,
The European Union has been helped economically ever since World War II. Right after World War II’s end, Europe was struggling to hold on. The countries of the modern-day European Union thought it would be a good idea to come together and help each others struggling economy. To this day, this decision has had a very positive outcome on the EU’s economy. As shown in Diagram 1, the European Union combined together has the world’s highest GDP at 18.3 Trillion USD as compared to the United States’ 17.4 Trillion USD GDP and China’s 10.4 Trillion USD GDP. The idea
First, I will discuss the time period between 1973-1974. Because the unemployment and inflation rates are higher than normal, we can assume that the aggregate-demand curve is downward-sloping. When the aggregate-demand curve is downward-sloping, we know that the economy’s demand has slowed down. When the economy’s demand has slowed down, businesses have to choice but to raise prices and lay off workers in order to preserve profits. When employers throughout the country respond to their decrease in demand the same way, unemployment increases.
Said in Document B, it shows a graph of Greece, Portugal, Czech Republic, and Hungary. It displays their synthetic GDP and their GDP when they joined the EU. As for all instead of Greece, their money increased, but Greece decreased. Even though joining the EU may be a good advantage for a lot of money, it may be sometimes a bad idea, because, for instance, Greece started off with about 35 trillion dollars for their GDP per capita in 2010, but after they joined, their GDP went lower to 25 trillion dollars (Document B). If you now look at Poland, it’s not a strong country.
The Structural Adjustment Programs (SAPs) are economic policies imposed on countries that borrow loans from the World Bank (referred to as “the Bank”) and the International Monetary Fund (referred to as “the Fund” or IMF). Originating from the right-wing neo-liberalism ideology of the Bank and the Fund (which are the International Financial Institutions or “IFIs”), the SAPs were created to establish a free market economic system in the borrowing (developing) countries, which lead to privatization within those countries. The Bank and the Fund tell the critics that the SAPs help ensure that the money lent will be spent in accordance with the overall goals of the loan and help in re...
Ronald Reagan once said, “We should measure welfare’s success by how many people leave welfare, not by how many are added.” Welfare began as a relief program in the 1930’s to assist those suffering from The Great Depression. In modern times, this system’s abuse rises every year. Social welfare spending causes people to abuse their free money; our government needs to revise the length of time for the benefits and who can receive this money.
Every few years, countries experience an economic decline which is commonly referred to as a recession. In recent years the U.S. has been faced with overcoming the most devastating global economic hardships since the Great Depression. This period “a period of declining GDP, accompanied by lower real income and higher unemployment” has been referred to as the Great Recession (McConnell, 2012 p.G-30). This paper will cover the issues which led to the recession, discuss the strategies taken by the Government and Federal Reserve to alleviate the crisis, and look at the future outlook of the U.S. economy. By examining the nation’s economic struggles during this time period (2007-2009), it will conclude that the current macroeconomic situation deals with unemployment, which is a direct result of the recession.
In chapter nine ‘Why is there an employment/inflation trade-off?’ the authors critique the natural rate theory. They agree with the fact that wage setting is influenced by expectations of inflation but disagree that inflationary expectation affects ‘wage and price setting one for one’
Peterson, J. and Shackleton, M. 2002. The institutions of the European Union. Oxford: Oxford University Press.
"Europe must prevent Greece from becoming an out-and-out catastrophe and make sure that the same fiscal 'remedy' is not applied to other weak economies" -- MEP, Franziska Brantner.
...ties to government, general analysis shows much needed transformation of the country is in the works.
Mulle, E.D., Wedekind, G., Depoorter, I., Sattich, T., & Maltby, T. 2013. ‘EU Enlargement: Lessons from, and prospects for’. IES Working Paper 3. Pp 8-39.
Inflation and unemployment are two key elements when evaluating a whole economy, and it is also easy to get those figures from the National Bureau of Statistics when you want to evaluate them. However, the relationship between them is a controversial topic, which has been debated by economists for decades. From some famous economists such as Paul Samuelson, Milton Freidman, etc. to some infamous economists, this topic received a lot of attention. However, it is this debate that makes the thinking about it evolve. In this essay, the controversial topic will be discussed by viewing different economists’ opinions on the subject according to time sequencing.
As mentioned before, the EU is the first of its kind; therefore it is natural for there to be some issues. The first major issue of the EU is its legitimacy. The European Union “still lacks widespread support and legitimacy among the citizens of Europe”. (page 315) This could be caused by the “democratic deficit “that has formed in the EU. The European Union is often blamed for having its institutions and operations too remote and “inaccessible to ordinary citizens”(315). The voter turnouts at for the last European parliament elections on saw “43 percent of eligible voters casting a ballot”(315), the lowest ever. This movement has been labelled “Euro-scepticism”, which is described as an opposition to the process of Europe’s integration. According to the BBC, Eurosceptics in the EU’s parliament have more than “doubled their representation [as] about one-third of the 751 MEPs are Eurosceptic” (http://www.bbc.com/news/world-europe-28107633). One major reason for this “Eurosceptic” movement is the economic issues that presented themselves during the 2009 and the 2011 recession. Europe, like the United States, was hit especially hard by this crisis and many flaws in the EU’s economical system were brought forth. The major issue resided with the common currency of the Euro. Countries with weak economies could not print more money to “devalue their currency to pay their debts and make their exports more competitive”. As the German economy was still “functioning reasonably well, the value of the Euro did not drop sufficiently to give a boost to the weaker economies in southern Europe”(314). This caused countries like Greece and Spain to be bailed out by the European Central Bank, but in return were forced to impose strict austerity measures which led to “soaring unemployment rates reaching over 25%” (314) . Riots
Rana, P., 1995. ‘Reform Strategies in Transitional Economies: Lessons from Asia’, World Development, Volume 23(7): 1157-1169
Daly, Mary, Bart Hobijn, and Rob Valletta. 2011. “The Recent Evolution of the Natural Rate of Unemployment.”