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ECB-EU-EUROZONE-ECONOMY-INEQUALITY
More ‘inclusive’ reforms could boost eurozone economy: ECB
FRANKFURT AM MAIN, June 23, 2018 (BSS/AFP) – Eurozone countries could
boost growth and employment by tackling more “inclusive” reforms to their
economies, according to a study published Friday by the European Central
Bank.
“Well-designed structural policies could yield substantial benefits for
euro area citizens via a stronger and more inclusive growth in employment and
incomes,” the authors suggested.
The working group that produced the study was set up by the ECB’s
governing council two years ago.
Since that time, “inclusive” growth has become a buzzword widely used at
international gatherings like the G20 and by organisations such as the OECD
or the International Monetary Fund.
Political and economic elites have increasingly turned their attention to
inequality as they scramble to understand the surge in anti-establishment
politics and seismic events like Brexit or the election of Donald Trump.
“There is an increasing perception that growth in the past has not been
sufficiently inclusive, and was not always associated with rising living
standards for everyone,” ECB chief Mario Draghi said last year.
“This has fuelled the belief that some have been ‘left behind’ by the
spread of market forces,” he added.
The report’s authors said countries should pursue reforms that would
reduce “rent-seeking” or economic actors taking advantage of weak competition
to fleece consumers.
They also urge changes to public institutions to squeeze out corruption
and tax avoidance.
Both moves would “not only support growth but also enhance equity, social
trust and social fairness,” the researchers found.
While such changes might appear desirable in themselves, they are also
directly relevant to the central bank, potentially improving the
effectiveness of its monetary policy — the interventions in interest rates
and the money supply it uses to steer the economy.
But there is no one magic formula that can be applied to all 19 nations in
the single currency zone, the authors said.
“Structural changes need to be country-specific and tailor-made to reflect
the specific national starting conditions in terms of economic structures and
institutions, as well as social preferences,” they noted.
BSS/AFP/HR/0945