The potential growth impact of structural reforms in the EU. A benchmarking exercise

Abstract:
This paper presents a quantitative model-based assessment of the potential impact of structural reforms in the EU Member States. By comparing structural indicators of labour and product markets, a gap is defined for each indicator relative to the 3 best performers. Scenarios are then simulated in which half the gap vis-à-vis best performance is closed, to avoid setting unrealistic and/or unattainable targets. The simulations show large potential gains in output and employment, raising EU GDP by 3% after five years and 6% after ten years. While competitiveness gains are smaller under simultaneous reforms, higher demand effects help to support growth in trading partners.

European Commission: DG Economic and Financial Affairs:European Economy: Economic Papers No.541, December 2014:The potential growth impact of structural reforms in the EU. A benchmarking exercise http://ec.europa.eu/economy_finance/publications/economic_paper/2014/ecp541_en.htm

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