Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/167426
Authors: 
Abberger, Klaus
Bhattacharyay, Biswa Nath
Nam, Chang Woon
Nerb, Gernot
Schoenherr, Siegfried
Year of Publication: 
2014
Series/Report no.: 
ifo Forschungsberichte 65
Abstract: 
Emerging countries in many cases are more crisis-prone than highly developed industrialized countries. This is in many cases due to a weak or volatile financial sector. The best policy to strengthen crisis resistance is the building up of a sound financial position. A sound financial position of a country also increases the capacities to get out of a crisis. For getting out of a crisis, however, an important additional general condition must be fulfilled: the economy must increase its international competitiveness to assure growth, the only way out of a crisis. Building up a sound financial position and a competitive private sector, therefore, should be a pre-crisis policy. It relates to the public sector as well as the financial institutions. Once a crisis has erupted in an unsound financial environment there is no chance to escape a crisis sustainably avoiding a painful process. The blueprint for getting out of a crisis suggests a complex policy approach. The private financial sector must undergo structural reforms (in reality closing down or downscaling unsound institutions) and the government must apply fiscal austerity measures to reduce public debt, regaining credibility and by this creating new fiscal options for counteracting crisis effects. Labour costs can be reduced by increasing the labour market flexibility (e.g. by easier hiring and firing and higher wage spreads especially towards the lower wage scale) and by measures directly reducing labour costs. The result of such measures will be an increase of unemployment and of felt unemployment risks by large population groups as well as general real income losses from labour. The fiscal austerity measures in addition and in short term will reduce economic activities and thus aggravate the social problems. These negative social effects of getting out of a crisis are the most crucial and controversial policy issue. People and their interest organizations to a greatly varying extent will accept or refuse.
Subjects: 
Wirtschaftskrise
Prävention
Krisenmanagement
Wirtschaftspolitik
Schwellenländer
JEL: 
E44
E61
F32
F33
F34
F42
G01
H63
O57
ISBN: 
978-3-88512-553-2
Document Type: 
Research Report

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