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EU unemployment is a problem. | 70 comments (70 topical, editorial, 0 hidden)
Re: EU unemployment is a problem. (4.00 / 3)
The start of the unemployment problem began with the energy crises of the 1970s, yes, but energy and resource prices played a far lesser role in the 1980s and 1990s.

Now, of course, those issues are back.

So I guess the answer is yes and no. Certainly resource supplies are a constraint on living standards, but the constraint is not always binding. Or, maybe it's better to say that the binding is looser at some times and tighter at others. Resource supplies, at least in the short term, were just not an issue in the 1980s (when oil prices fell well below their 1970s levels) and 1990s.

by TGeraghty on Tue Mar 28th, 2006 at 11:24:44 AM EST
[ Parent ]
Re: EU unemployment is a problem. (4.00 / 2)
I guess the question I'm asking:

Will Blancahrd's recommendations head off the impact of the next oil shock?

Maybe I'm just too tired right now, but it's not clear to me that his ideas explain how to deal with an oil shock whilst it is happening, (rather than after it is done with) and yet everything Jerome posts points to an "expensive-energy" future at the moment.

by Metatone (metatone [a|t] gmail (dot) com) on Tue Mar 28th, 2006 at 11:37:31 AM EST
[ Parent ]
Re: EU unemployment is a problem. (4.00 / 2)
If you could predict the consequences sure. We could act to adapt ourselves to the expected consequences. We might be wrong though.
by Colman (colman at eurotrib.com) on Tue Mar 28th, 2006 at 11:39:47 AM EST
[ Parent ]
Re: EU unemployment is a problem. (none / 0)
Exactly.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Tue Mar 28th, 2006 at 04:03:12 PM EST
[ Parent ]
Re: EU unemployment is a problem. (4.00 / 4)
With supply constraints the problem you tend to get is "stagflation" -- rising inflation and rising unemployment simultaneously.

One answer to this, as Blanchard points out, is that if one set of costs (say resource costs) are rising, other costs have to be stabilized if employment levels are to be preserved.

This can mean "incomes policy," where business, labor, and government get together to make sure that wage deals do not exacerbate inflation. Countries such as Germany that had this kind of system in place got through the 1970s better than countries that didn't, like Britain for example.

by TGeraghty on Tue Mar 28th, 2006 at 11:50:09 AM EST
[ Parent ]

EU unemployment is a problem. | 70 comments (70 topical, 0 editorial, 0 hidden)
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