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Growth Effects of Structural Reforms in Southern Europe: The case of Greece, Italy, Spain and Portugal

Janos Varga, Werner Roeger, Jan in 't Veld

Growth Effects of Structural Reforms in Southern Europe: The case of Greece, Italy, Spain and Portugalpdf(2 MB) Choose translations of the previous link 

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This paper develops a semi-endogenous growth model for analysing the intertemporal effects of structural reforms in Southern European countries (Italy, Spain, Portugal and Greece). The model follows the product variety paradigm in a semi-endogenous setting, and includes a disaggregation of labour into different skill groups. We use a comprehensive set of structural indicators in order to calibrate the model to important macroeconomic ratios and levels of productivity and employment. Our results show that structural reforms yield significant economic gains in the medium and long run. The results point to the importance of product market reforms and labour market related education and tax reforms as the most promising areas of structural policy interventions. This paper also argues for placing more emphasis on education policy which is key in upgrading the labour force, especially in these countries where the share of low skilled labour is among the highest in the euro area.

(European Economy. Economic Papers. 511. December 2013. Brussels. PDF. 68pp. Tab. Graph. Ann. Bibliogr. Free.)

KC-AI-13-511-EN-N (online)
ISBN 978-92-79-32338-6 (online)
doi:10.2765/5500 (online)

JEL classification: E10, O20, O30, O41

Economic Papers are written by the staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The Papers are intended to increase awareness of the technical work being done by staff and to seek comments and suggestions for further analysis. The views expressed are the author’s alone and do not necessarily correspond to those of the European Commission.

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