Economic Resilience in EMU

Abstract

This section discusses why convergence towards resilient economies is key for improving the functioning of the Economic and Monetary Union. Economic resilience refers to the ability of countries to withstand shocks and for GDP growth to recover quickly to potential levels. The experience of recent years has shown how the lack of resilience in one or several economies in the euro area can have significant and persistent effects not only on the countries concerned but also on other countries and the euro area as a whole, through multiple channels. This section focuses on which policies can contribute to resilience in the EMU. To do so, it develops the notion of economic resilience, provides a framework to identify key areas for resilience in a monetary union and a taxonomy of factors and policies that influence the resilience of Member States’ economies. The proposed framework is not a one-size-fits-all approach, but leaves room for country-specific policy settings and the sharing of best practices. There are notable differences in economic resilience among euro area countries and the broad taxonomy in this section could provide guidance for the prioritisation of reforms