AUSTERITY VERSUS STIMULUS

Group 6Rafael Ramos Codeco/Paul Yu/Catherine Chien

29th Academy of International Economic Affairs, MOEA.Taiwan, August 2014

Main topics

How United States of America (USA) and Europe Union (EU) Governments faced the 2008 Global Crisis: USA – Stimulus EU – Austerity

Importance of the private sector for the effectiveness of these measures.

The USA case

Stimulus between 1,2 to 1,5 trillion (6% of the GDP);

Results reached: GDP growth average of 2% per year since 2009; Unemployment official rate of 7,5%.

The European Union case

Government expenditures has been cut by half;

Results reached: GDP is standstill; Unemployment rate is 12%.

Protest in London June this year --- No more Austerity! Demand the

Alternatives--- Ask for living wage Ask for proper housing Ask for tax justice Ask for public ownership for bank

The importance of the private sector in USA

Firms and households weight on goods and services purchasing;

Uncertainties of investors; Investments directing to abroad;

The importance of the private sector in EU Firms and households weight on goods and

services purchasing; The direct involvment of government in private

sector (as part-owners or seating on corporate boards).

EU’s private sector less entrepreneurial and innovative.

Obrigado!Thank you!

谢谢