In the 1980s, average annualized economic growth in the EU15 was 2.5 percent, nearly 1 percentage point lower than in the United States, and in the 1990s--as European nations converged toward the Maastricht Treaty's criteria and entered into the European Union--the gap widened: Europe's 2.2 percent growth was 1.4 percentage points behind the United States. Since the European Monetary Union was established, eurozone growth has averaged 1.9 percent annualized (1.6 percent in core Europe), while growth in the United States has averaged 2.6 percent (Olaf Gersemann, Cowboy Capitalism, CATO Institute)
- The startling gap between employers' costs of employment and workers' take-home pay in most European nations highlights the problem (Heitger, B. (2000) "Unemployment and Labor Market Rigidities in OECD Countries: The Impact of Taxes." Keil Institute of World Economics, Working Paper No. 985 (May). ) o. 985 (May). )
Fiscal policy
- Fiscal policy reform in Europe is constrained and distorted by the Stability and Growth Pact, specifically its requirement that limits deficits to 3 percent of GDP. By limiting countercyclical fiscal policy and tax reform, the SGP does not enhance stability or encourage growth. courage growth.
