A very important point: Is it possible that the crisis has changed potential growth in some countries?

- "Actual growth in certain countries may have been changed by the crisis, while potential growth has not: the halt in indebtedness, in the real estate boom and in immigration, as well as the rise in unemployment, have led to a halt in actual growth, which has been very impressive for instance in Spain."
- "But the question is whether potential growth may have been changed by the crisis. We start off from potential growth to assess the quality of the countries’ growth, their capacity to stabilise their public and private debt ratios, to cope with ageing, to have sufficient return on capital to attract savings, etc."
- "Now, one may think that potential growth is affected by the crisis; if there is for instance a change in the investment rate, in the sectoral structure of the economy, or in taxes or government expenditure that have an effect on the supply of goods and services."
- "When looking at the large OECD countries, we believe that these developments can be seen everywhere, and seemingly to a great extent in certain Southern European countries (Spain, Portugal)."

Natixis Flash Economics 380 20100727

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