Can Conventional Macroeconomic Policies Prevent Persistent Stagnation in the European Union?. Policy Brief n.5. November 2014

Policy Brief

This Policy Brief is the first of a series of three that explore progressive policies that could address the current economic dilemma of the European Union. This first one assumes a continuation of conventional macroeconomic policies together with a significant rise in capital investment. We give particular attention to Jean Claude Juncker’s announcement of an ambitious investment package, advertised to be financed by €300 billion over three years. Our macroeconomic modelling clearly shows that the scale of this plan when accompanied by continued reductions in government spending and revenue would not be sufficient to stave off secular stagnation throughout Europe.