Demographics and the Growth Outlook for Europe. ESRI Research Notes 2015/1/2

McQuinn, Kieran and Whelan, Karl (2015) Demographics and the Growth Outlook for Europe. ESRI Research Notes 2015/1/2. UNSPECIFIED.

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Abstract

With low inflation in the Euro Area taken as a given, a return to steady real GDP growth is likely to be the most effective mechanism for restoring Europe’s highly indebted governments, businesses and households to sustainable situations. This paper examines prospects for growth in the Eurozone. It follows up on an earlier paper of ours (McQuinn and Whelan, 2008) that focused on trends up to mid-2006. While the period of growth in Europe prior to the global crisis of 2008 is sometimes referred to as “the boom”, our previous paper had noted that long-run trends in both productivity and per capita hours worked were deteriorating to the point where potential output growth in the Euro Area was at a historical low point and apparently on a negative trend. After a long period of catching up with US levels of labour productivity, Euro Area productivity growth had, from the mid-1990s onwards, fallen significantly behind.

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