To send content items to your account,
please confirm that you agree to abide by our usage policies.
If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account.
Find out more about sending content to .
To send content items to your Kindle, first ensure email@example.com
is added to your Approved Personal Document E-mail List under your Personal Document Settings
on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part
of your Kindle email address below.
Find out more about sending to your Kindle.
Note you can select to send to either the @free.kindle.com or @kindle.com variations.
‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi.
‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.
Financial crisis could play a key role in changing the policy equilibrium concerning financial markets and institutions. Using a recent comprehensive dataset on financial liberalization across ninety-four countries for the period between 1973 and 2015, we formally test the validity of this prediction for the member states of the European Union as well as a global sample. We contribute by (a) using a new up-to-date dataset of reforms and crises and (b) subjecting it to a combination of difference-in-differences and local projection estimations. In the global sample, our findings on the causal relationship between crises and liberal reforms consistently point out a negative direction between the two, suggesting that governments react to crises by intervening in financial markets. However, in a dynamic setting with impulse responses, we also illustrate that such interventions are only temporary and liberalization process restarts after a financial crisis. In the EU sample, however, we do not find sufficient evidence to support either of these observations.
The financial crisis of 2007–2008, which led to the Great Recession of 2008–2009 and triggered the sovereign debt crisis in the euro area in 2010, has led to a lot of soul searching among professional economists. With the benefit of hindsight, it can now be said that these crises were misdiagnosed in two ways. First, many economists interpreted these crises to have increased the need for more flexibility in labour and product markets. Structural reforms aimed at making both labour and product markets more flexible were seen as the tools to boost economic activity and to launch countries into a higher growth path. Thus, although the initial shocks were understood to have originated from a financial and banking implosion, which led to a collapse of aggregate demand in 2009, many economists surprisingly advised to fix the supply side.
It has long been argued that structural reforms constitute a remedy for getting countries out of the low-growth environment that Europe has experienced in the last decade. Many recent studies show long-term benefits of such reforms in cross-country settings, but ignore the heterogeneity across different country experiences. To address this gap in the context of the European Union, we focus on the largest early reforms that its four members (Denmark, France, Greece and Portugal) adopted in financial and labour markets. By using a Synthetic Control Method, we find that many of these early reform episodes do not seem to have been as fruitful as their advocates claimed at the time. Our results indicate a rather mixed relationship between reforms and several macro measures, including economic growth and inequality. Reforms, especially when introduced all at once as a big-bang, do not seem to always produce the intended results.
One reason the effects of individual structural reforms are notoriously difficult to capture is the possibility that they depend upon other reforms and institutions. This chapter studies whether and to what extent reforms in labour market regulation are complementary to tax changes in increasing employment in the European Union (EU). We use a dynamic model of employment growth to estimate and try to disentangle the individual effects from the combined effects of these reforms using a yearly panel of EU countries from 1990 to 2015. Our estimates suggest that reform complementarity between labour market policy and taxation, through substantial and significant interaction effects, seems key to foster employment growth and enhance the effectiveness of both reforms.
Since the financial crisis started in 2007–2008, many advanced economies have struggled to return to their precrisis growth path. Although the recovery in the United States was relatively rapid, Europe’s wasn’t. A sovereign debt crisis led to a double-dip recession in the euro area. Unemployment soared, particularly youth unemployment in the periphery countries, and private and public investment experienced an extremely slow and protracted recovery with its precrisis level still not being reached in many countries. The experience has also been uneven across Europe’s core and periphery countries: from the form in which reforms were designed and implemented to the depth and speed of the recovery.
In contrast to the USA, Europe has struggled to return to the growth path it was on prior to the financial crisis of 2007–11. Not only has the recovery been slow, it has also been variable with Europe's core countries recovering more quickly than those on the periphery. It is widely believed that the best way to address this slow recovery is through structural reform programmes whereby changes in government policy, regulatory frameworks, investment incentives and labour markets are used to encourage more efficient markets and higher economic growth. This book is the first to provide a critical assessment of these reforms, with a new theoretical framework, new data and new empirical methodologies. It includes several case studies of countries such as Greece, Portugal and France that introduced significant reforms, revealing that such programmes have very divergent, and not always positive, effects on economic growth, employment and income inequality.