Measuring the macroeconomic resilience of industrial sectors in the EU and assessing the role of product market regulations

We study sectoral business cycles for industry across EU countries, looking in particular how these are affected by common exogenous shocks (this is our definition of resilience), and investigate whether product market regulations play a role in minimising such fluctuations. The analysis is conducted for the period 1980-2008, and separately for the 2008-09 downturn. We find robust evidence that product market regulations help in explaining differences in the adjustment capacity of sectors. In addition we identify which sectors are consistently less resilient across the EU and provide information about how these translate to country differences. A number of policy recommendations emerge from the analysis which can be useful when designing structural reform strategies at the EU level.