Y376 International Political Economy

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Y376 International Political Economy Powered By Docstoc
					Explaining Variance in Responses to
   the Financial Crisis of 2007-8
           Jeffrey A. Hart
         Indiana University
            April 8, 2011
      My contact information
Department of Political Science
Woodburn Hall 210
Bloomington, IN 47405
Email: hartj@indiana.edu
Web: http://mypage.iu.edu/~hartj
Bank Lending in EU27
GDP and Employment in EU 27
Comparing European Growth to
   That of Other Regions
            More Stylized Facts
 23 million unemployed as of Feb 2010; 7 million
    added in less than 2 years.
   Youth unemployment is > 20 percent.
   Increase in the percentage of the elderly is a
    trend that continues, contributing to higher levels
    of government expenditure and lower
    productivity growth.
   Average debt/GDP in EU27 is over 80 percent.
   EU continues to slide overall in trade
    competitiveness (DK and DE are exceptions).
Increases in Unemployment by
      Country 2008-2009
Debt/GDP in EU16 and US,
       1999-2010
Debt/GDP by Country, 1999-
          2010
A Possible Explanatory Model
Crisis-related shock variables             Pre-crisis economic
                                           performance

National System Characteristics


                        Policy Responses
                                               Economic
Short-term political
                                               outcomes
factors
Crisis-Related Shock Indicators
 Increase risk of bank/non-bank failures,
    nonperforming loans
   Credit crunch, continuing confidence
    problems
   Decline in real GDP growth
   Increase in unemployment
   Increase in government deficits
 Short- to Medium-Term Goals
   Defined at the EU Level
 Return to a higher rate of growth
 Reduce unemployment
 Reduce budgetary imbalances
 Increase bank lending and investment
 Improve financial regulation
 Preserve the Euro
 Coordinate policies to prevent races to the
 bottom and protectionism
    National Systemic Mediating
             Variables
 State-Societal Arrangements
 Financial sector institutions (Anglo-Saxon
  vs. Rhenish models)
 Big vs. small countries
 West vs. East European countries
    Policy Response Variables
 Size of post-crisis stimulus
 Reduction in government spending
 Regulation of financial services industry
 Economic Outcome Variables
 Real GDP growth rate
 Change in level of unemployment
 Export growth
 Productivity growth

				
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