economic growth can not be
force
Germany is currently an exception among the major industrial economies. The affected directly by financial and property crisis countries are experiencing only a slow recovery. Get back to the high growth path? After structural crises is not possible. The expansionary monetary policy, overestimated the potential.
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Like a phoenix rising from the ashes of the German economy from the Great Recession. Germany is thus but an exception among the major industrial economies. The affected directly by financial and property crisis countries are experiencing only a slow recovery. That's the difference to "normal" recessions, is where the intruder usually a rapid recovery back to trend to the old growth path. "In a crisis like the recent it is different," explains Joachim Scheide, chief economic of the Institute of World Economics (IfW) in Kiel. The most recent similar "Such a crisis to sustainable growth costs. Out" so that those major crises such as that Kenneth Rogoff, former IMF chief economist investigated.
Even a cursory look at the economy turns the United States, Great Britain, Spain and Ireland shows there a distinctive break between the statistically extrapolated growth path of the last five or ten years and the actual measured downward bent over since the crisis. "All these countries had previously excesses that will be corrected once need, "said vagina. The construction sector was bloated, stretched the financial sector. After the bubbles burst, the cleanup has begun. The decline in the construction sector and financial institutions is a painful process, combined with a sharp rise in unemployment. Germany, however, must adjust its economic structure is not as radically new, so is the recovery progress more easily. .
The desperate struggle of the Fed
The United States have set up two large stimulus packages, in addition, the Federal Reserve tries to push the economy with cheap money and then raise it to its former level (see Fed continues its policy of cheap money ). So far, the shows but little success. You just can not simply force growth when the economy is structurally arranged first complete re-examination says Thomas Mayer, chief economist of Deutsche Bank. In the years of credit-driven boom in America are more and more jobs in manufacturing have been removed and replaced with new jobs in service industries have been. "This has inflated the nominal GDP, for example by a former worker was retrained for realtor who deserved more, "says Mayer.
But now America is prostrate housing market, the financial services sector seems oversized. The return to more processing industry is locked in the short term, since many factories have long since moved abroad, mostly to Asia. "Therefore, structural unemployment is much higher today to share and low production potential," says Mayer. "The Fed is fighting on against unemployment, which is after the bursting of the bubble due to structural reasons, can not work."
miscalculation with consequences
What is the output gap in the United States, so the gap between the current and potential production is a key issue for economic and monetary policy. According to figures from the government official Congressional Budget Office, the output gap was in the crisis year of 2009 giant 8 percent and could still make up more than 5 percent - in absolute terms, approximately $ 800 billion. True, however, the thesis that the growth path was oversubscribed in the credit-driven boom years and that the crisis part of the production capacity has made inoperable, then the gap would be much smaller.
There are a growing number of economists who hold this theory. Kiel Institute of Economic Chief vagina warns of the consequences of miscalculation: "If the Fed overestimates the output gap, then monetary policy is too long expansionary, which would pose inflation risks." Mayer sees no risk of stagflation in the seventies at the broader horizon . In a well-known essay has shown the Cypriot economist Athanasios Orphanides, a vice president of the ECB, that at that time, most central banks, the output gap overestimated and therefore long sought a loose monetary policy, the economy to pick up the previous growth path. Instead they reaped growth but inflation.
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