Tracking long-run growth in the euro area with an atheoretical tool: The role of real, financial, monetary, and institutional factors

a column by Mariarosaria Comunale and Francesco Paolo Mongelli for VOC@ CEPR’s Policy Poeral

Over the past 30 years, euro area countries have undergone significant changes and endured diverse shocks.

This column assembles a large set of variables covering the years 1990-2016 and investigates possible links to fluctuations and differences in growth rates.

The findings suggest a significant positive role for institutional integration in supporting long-run growth, particularly for periphery countries.

Competitiveness and monetary policy also matter for sustained growth in the long run, while higher sovereign stress, equity price cycles, loans to non-financial corporations and debt over GDP have either mixed or negative effects in core and periphery countries.

Continue reading and you will find a really interesting (to me) graph which takes a bit of understanding.

Labels:
ECB, economic_growth, euro_area, monetary_policy, global_crisis, institutional_integration,

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