Risks of Stagnation in the Euro Area

ByHuidan Huidan Lin

January 22, 2016

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper discusses the risks of stagnation over the medium term in the euro area. It examines the consequences of longer-term growth trends that predate the crisis and the progress made in addressing the crisis legacies of high unemployment and debt. The paper illustrates in a downside scenario, how low potential growth and crisis legacies leave the euro area vulnerable to a negative shock that tips the economy into a prolonged slowdown.

Subject: Capital accumulation, Inflation, Labor, National accounts, Prices, Private investment, Production, Total factor productivity

Keywords: area business investment, area difference, Capital accumulation, crisis, Deleveraging, Downside scenario, euro, Euro area, Euro area business investment, Global, IMF staff calculation, Inflation, interest rate, investment growth, labor productivity in the euro area, Potential growth, Private investment, Productivity, productivity frontier, productivity gap, productivity slowdown, service sector productivity, Total factor productivity, WP

Pages:
25
Volume:
2016
DOI:
https://doi.org/10.5089/9781513586175.001
Issue:
009
Series:
Working Paper No. 2016/009
Stock No:
WPIEA2016009
ISBN:
9781513586175
ISSN:
1018-5941

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