The euro area has – in contrast to the USA – still not recovered from the "Great Recession" 2009 and the following euro crisis.
Some fear that Europe could embark into a decade of "secular stagnation" like Japan in the recent past. The US success can
be attributed to the application of the strategy of the "three arrows": a co-ordinated expansionary fiscal and monetary policy
cum permanent structural reforms. In contrast, the euro area has its hands tied by a self-imposed restriction in fiscal policy
(new fiscal rules). Thus, the euro area remains as a growth-stimulating strategy only an expansionary monetary policy by the
ECB plus "structural reforms" at the member country level. Austria – after the expiring of the hitherto "EU growth bonus"
– has also to look for new strategies to stimulate growth by its own. In simulations with a macro-growth model for Austria
alternative growth scenarios are analysed: structural reforms to improve efficiency in product und labour markets, investment
in knowledge and innovation (R&D), more globalisation, and traditional demand policies (monetary and fiscal). The most promising
strategies are more globalisation and structural reforms plus R&D investments. Most of these strategies would stimulate growth
without impairing fiscal sustainability.
Forschungsbereich:Makroökonomie und öffentliche Finanzen