Over a ten year period, this would imply an increase in the GDP level of up to 7 or 8%. Of course, these are just crude calculations, which, however, give a notion of how large the welfare-enhancing potential of implementing structural reforms is. Also the ECB’s monetary policy has a role to play in supporting the implementation of structural reforms.
Because home equity has been the main source of wealth among low- and moderate-income people, the crisis dealt a particularly severe blow to these households. Most Americans rely on home equity to send their children to college, invest in their own education and training, or start or grow a business. These aspirations are the basis upon which a strong economy is built.