Ten years ago, the global financial crisis started to unwind in the USA and triggered the greatest recession since World War
II. Although the crisis of 2007-08 was caused in the USA, their economy was not hit so hard in the Great Recession of 2009
as in Europe, and in particular in the Euro area. The USA also recovered more rapidly and sustained from the crisis than the
Euro area. Additionally, the specific Euro (debt) crisis of 2010 led to a double-dip recession in the Euro area, not joined
by the USA. This divergent post-crisis development since then accumulated to a considerable growth gap between the USA and
the Euro area. What are the factors behind this different performance? Would a more aggressive fiscal and/or monetary policy
in the Euro area have closed the growth gap? As our simulation exercises show: the answer is no. However, the unconventional
monetary policy by the ECB since 2014-15 contributed to the most recent recovery in the Euro area. We identify the pivotal
reason of Euro areas growth lagging behind the USA in the different experiences in the crises management. The USA has a long-lasting
experience in handling financial crises. In historical comparison, the Euro area – the Economic and Monetary Union (EMU) of
the EU – is still a "teenager". The crises revealed, that the legal basis of the institutional set-up of EMU and hence of
the Euro area was not enough crises-proven. Rescue instruments had newly to be implemented. The global financial crisis was
the first great shock which was badly absorbed by the still quite heterogeneous Euro countries. The Euro area, shattered by
a succession of external (global financial crisis, Great Recession) and internal (Euro crisis) shocks, could therefore not
unfold its growth potential in the last decade. If – hypothetically – the Euro area would have profited from the faster-growing
production inputs (capital and labour) as in the USA, the growth gap could have been closed.
JEL-Codes:E37, E52, E62, F15, P52
Keywords:USA, Euro area, European integration, business cycles; economic growth
Forschungsbereich:Makroökonomie und öffentliche Finanzen