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These are all indicators They help to explain your teams season Will your team go to the Superbowl?
0
2006 2007 2008 2009 2010 2011 2012
-1 -2 -3 -4 -5
United States
Source: OECD, IMF 5
10
United States
Source: Eurostat, IMF 6
2 1.5 1 0.5 0 -0.5 -1 2004 2005 2006 2007 2008 2009 2010
United States
Source: Eurostat, IMF 7
The euro area: core and periphery countries Core countries: Germany, France, Netherlands, Austria, etc. Periphery countries: Portugal, Ireland, Greece, Spain
10
5 Germany Ireland 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-5
-10
Source: IMF
Portugal?
Spain? Italy? Belgium? Financial markets exhibit herd behavior
The euro will not survive the first major European recession. Professor Milton Friedman, 1912-2006
Stimulus vs. austerity debate: should governments use fiscal stimulus to support economy? or cut back deficits and bring down the debt level?
Increase competition
Economic reform program developed at EU level Each country adopts own measures Aims to spur more knowledgeintensive, innovation-based growth Raise employment rate to 75% R&D spending should be 3% Prepare for longer-term challenges: aging, globalization An agenda for growth and jobs
Deficit and debt levels rose sharply due to the crisis But already too high in several countries Countries now facing much higher borrowing costs Greece and Ireland forced to seek assistance Too high a debt level reduces economic growth
Aging Population
There are currently four people of working age for every retired person By 2050 there will be only two people of working age for every retired person
As populations age, economic growth slows, tax revenue falls (fewer workers)
Increased age-related spending on healthcare, pensions Crisis makes it even more urgent to have low debt levels
high
unemployment benefits
low
employment protection
weak
strong
Marie-Claude designed 5 web sites Karl-Heinz designed 8 web sites Who is more productive?
26
Marie-Claude designed 5 web sites Karl-Heinz designed 8 web sites Who is more productive? Marie-Claude worked 200 hours Karl-Heinz worked 400 hours Now who is more productive?
27
Slow growth