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Sarkozy’s Economic Policy

Sarkozy’s Economic Policy. CES, November 1, 2007. Solving Problems. “The French didn’t elect me to comment on their situation. They elected me to solve problems.”. Caveat: Beware of Economic Statistics.

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Sarkozy’s Economic Policy

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  1. Sarkozy’s Economic Policy CES, November 1, 2007

  2. Solving Problems • “The French didn’t elect me to comment on their situation. They elected me to solve problems.”

  3. Caveat: Beware of Economic Statistics • To say that net output to-day is greater, but the price-level lower, than ten years ago or one year ago, is a proposition of a similar character to the statement that Queen Victoria was a better queen but not a happier woman than Queen Elizabeth—a proposition not without meaning and not without interest, but unsuitable as material for the differential calculus. • -- John Maynard Keynes

  4. We are a great nation … … but we are losing ground

  5. Well-Being: log real gdp per capita

  6. Keeping up with the Joneses

  7. Keeping Up with Joneses 2

  8. Trade Openness

  9. FDI flows

  10. Foreign Direct Investment Inflow 06

  11. Portfolio Investment

  12. Investment

  13. Why are we losing ground? We are highly productive ….

  14. Labor Productivity Trends

  15. TFP Growth in Services

  16. … but we don’t • Work as many hours • Work as many years • Put as many people to work

  17. Annual Hours Worked per capita

  18. Hours worked change over 3 decades

  19. Current Unemployment

  20. Tax Wedge

  21. Government Spending and Debt

  22. Additional Budget from Ageing Population

  23. Growth of Public Debt

  24. Policy Implications • Acte pour le travail, l’emploi, et le pouvoird’achat (TEPA) • Supply Side (Travailler plus) • Detaxing of overtime, nip at 35 hr wk • Cost 6 bneuros • Reform of special regimes, later of general regime • Labor market reforms=UNEDIC/ANPE merger, continuing ed • Single labor contract • Minimum service

  25. Policy Implications 2 • Demand Side (plus incentives) • Mortgage Deduction • Inheritance tax reduction • Fiscal Shield Reduction • Total cost: 8 bneuros

  26. Policy Implications 3 • Deficit Reduction • Medical copays • End special regimes, increase contribution time • Social VAT?? • Purchasing Power • Galland, Raffarin, and Royer Laws

  27. Policy Implications 4 • Eurogroup meeting, clashes with Germany, Trichet, Juncker • Interest rates • Exchange rates • Energy market rationalization/nationalization (GDF-Suez, Areva, Gazprom) • EADS reorganization • Competitivity Clusters • University Reform

  28. Purchasing Power & Career Incentives

  29. Consumer Price Index

  30. Income and Wealth Distribution

  31. Earnings Dispersion

  32. Earnings Dispersion

  33. Unionization Rate

  34. Min Wage inv. Rel. to Union rate

  35. Pct workers paid minimum wage

  36. Research & Development

  37. “One can be impressed, I think, without being surprised, but I don’t think one can be surprised without being impressed.” -- Mme de La Fayette

  38. Extra Data

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