6 The expansions correspond to periods following global recessions, as identified by IMF (2009), while also including the dot-com crash of 2001 that coincided with mild recessions in many advanced economies. 7 Investment profitability appears to have declined since the crisis and the spread between equity and sovereign bond returns has widened, implying rising risk premia (IMF, 2014).
It is not enough to give one-dimensional prescriptions such as that the all labour markets must become more flexible. What matters is that the combination of policies and institutions within each country produces an outcome that is satisfactory for its citizens and sustainable for the euro area as a whole.