Abstract
In the 15 years leading up to the recent crisis, the world economy's exceptional performance was driven by globalisation, rapid, export-driven growth in emerging markets, debt-fuelled consumption in major advanced economies, and a benign financial and macroeconomic environment. These, however, sowed the seeds for the financial crisis by creating unsustainable imbalances and distortions. Obstacles to future growth are likely to be retrenchment in consumption, dampened investment, and unsustainable fiscal balances. Going forward, there must be a renewed commitment to medium-term, rule-based, policies for maintaining fiscal sustainability, price stability, and financial stability. The international imbalances between savings and consumption must also be addressed through a global reform agenda discussed in the paper. Even with reform, the challenges to growth will be daunting. Without reform, however, it is likely that the global economy will suffer a lost decade.
Similar content being viewed by others
Additional information
Speech delivered at NABE Economic Policy Conference 8 March 2010.
*Jürgen Stark has been a Member of the Executive Board of the European Central Bank since June 2006. Raised in Rhineland-Palatinate, he studied economics at the University of Hohenheim and Eberhard Karls University of Tübingen. He received a doctorate in 1975. From 1978 to 1998 he held economic policy positions in the German Federal Government. From September 1998 to May 2006 he served two consecutive terms as Vice President of the Bundesbank. He is also Honorary professor in the Faculty of Economics at Eberhard Karls University, Tübinge; Deputy Chairman of the Board of Trustees and the Executive Board of the ifo Institute, Munich (since 1999); and Chairman of the Board, University of Hildesheim Foundation (Lower Saxony) (since 2003).
Rights and permissions
About this article
Cite this article
Stark, J. Is the Global Economy Headed for a Lost Decade? A European Perspective. Bus Econ 45, 147–151 (2010). https://doi.org/10.1057/be.2010.12
Published:
Issue Date:
DOI: https://doi.org/10.1057/be.2010.12