Publication

This paper highlights a number of economic policy concerns in Eurozone member countries in light of increasingly-burdensome demographic trends and declines in labor productivity and investment growth. It examines in greater detail the discrepancy in growth between the larger and smaller states and suggests that the former have been less adaptive to change due to the increased size of the home market and poor fiscal discipline, especially vis-à-vis the Stability and Growth Pact that forms an integral part of the Lisbon Agenda. It concludes that while the Lisbon Agenda cannot change either demographics or the decline of the capital/labor ratio, certain structural reforms can help overcome current negative trends, principally the implementation of a long-term oriented fiscal policy of surpluses to both address future ageing and allow for increased investment expenditure.