Structural Policies in the Euro Area

185 Pages Posted: 25 Jun 2018

See all articles by Klaus Masuch

Klaus Masuch

European Central Bank (ECB)

Robert Anderton

European Central Bank (ECB)

Ralph Setzer

European Central Bank (ECB)

Nicholai Benalal

European Central Bank (ECB)

Date Written: June 22, 2018

Abstract

Structural policies in the euro area are of great interest for the Eurosystem, particularly as they can support the smooth functioning of the Economic and Monetary Union (EMU) and the effectiveness of monetary policy. This paper adopts a broad definition of structural policies, analysing not only the benefits of efficient labour, product and financial market regulations, but also emphasising the importance of good governance and efficient institutions that ensure high quality and impartial public services, the rule of law and the control of rent-seeking. The paper concludes that there are many opportunities for enhanced structural policies in EU and euro area countries which can yield substantial gains by boosting long-term income and employment growth and supporting social fairness, also via better and more equal opportunities. It provides empirical and model-based analyses on the impacts and the interactions of structural policies, highlighting synergies between growth and inclusiveness, while acknowledging that structural policy changes need to be country-specific to reflect national conditions and social preferences. Welldesigned structural policies would also strengthen economic resilience and convergence of Member States, bringing the euro area closer to the requirements of an optimal currency area and improving the transmission of monetary policy. The paper also discusses the political economy causes of the sluggish implementation of socially beneficial structural policies and assesses ways to deal with possible shortterm costs of reforms.

Keywords: structural reforms, institutional quality, governance, inclusive growth, economic resilience, political economy, euro area

JEL Classification: D60, E24, G28, H11, J08, 043, O47

Suggested Citation

Masuch, Klaus and Anderton, Robert and Setzer, Ralph and Benalal, Nicholai, Structural Policies in the Euro Area (June 22, 2018). ECB Occasional Paper No. 210. Available at SSRN: https://ssrn.com/abstract=3202072

Klaus Masuch (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Robert Anderton

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
0049 69 13440 (Phone)
0044 69 1344 6000 (Fax)

Ralph Setzer

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Nicholai Benalal

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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