Economists - Why aren't the economies of the EU and that of the USA improving?


complex question, simplified: , eu governments not doing enough promote economic growth.

private households , companies reducing debt (i.e. de-leveraging balance sheets) reacting financial crisis of 2008/09. result, consumer spending goes down, companies experience lower sales , higher inventories, therefore reduce investments. lower sales, companies lay off workers, unemployment goes up. result of higher unemployment, government's tax revenues goes down, government expenditures goes (for example through higher unemployment payments). government deficit increases result.

in order jump-start economy , people work, governments should increase spending, example on infrastructure, such highways, bridges, airports, etc. decrease unemployment, increase consumer spending, increase demand new products, increase tax revenue, reduce payments unemployment benefits , economy on growth path.

instead, politicians seem fixated exact opposite, example cameron in uk, focusing on reducing government spending , reducing budget deficit, thereby making situation worse. called austerity policy. uk, example experiencing deeper recession result of badly misguided austerity of government.

china, on other hand, reacted financial crisis increasing government spending massively. chinese government implemented stimulus package in 2008 equivalent 35% of gdp. result: chinese economy has slowed down, still growing @ 7 8%.

i'm sure there tons of intelligent economics professors know answer, why isn't getting better?

has chinas economic growth been result of financial crisis? (for obtain more money, has lose of his, right?)


Social Science Economics Next



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