Four global macroeconomic policy blunders

Global economic policymakers have made at least four major blunders over the past few years. It is also a possibility that the consequences of more than one of these errors will be triggered within the next twelve months, further dimming the global economic outlook.
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A third economic policy mistake of epic proportions was that made by a number of major European countries, which adopted the Euro as their common currency in 1999 and then did not play by the rules of a monetary union. Those rules, which require the maintenance of budget discipline and of vigilance against inflation, were generally honored in the breach. Now stuck in a Euro straitjacket, the countries in Southern Europe have had the greatest of difficulties in restoring balance to their public finances and in regaining lost international competiveness.

The net result has been that the European economy has failed to grow over the past eight years and it is yet to regain its 2008 level of production. Equally troubling is the fact that poor economic performance has contributed to a fragmentation of European politics and it has made it difficult for countries in the European periphery to reduce their very high public debt burdens. This makes the European economy especially vulnerable to any renewed global economic downturn.

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Four global macroeconomic policy blunders

Πηγή: American Enterprise Institute