The resilience of EU Member States to the financial and economic crisisWhat are the characteristics of resilient behaviour

Abstract

This study presents an empirical analysis of the resilience of European countries to the financial and economic crisis that started in 2007. The analysis addresses the following questions: Which countries showed a resilient behaviour during and after the crisis? Is resilience related only to the economic dimension? Has any of the EU countries been able to use the crisis as an opportunity and 'bounce forward'? Is it possible to identify any particular country characteristics linked to resilience? The analysis is based on the JRC conceptual framework for resilience (Manca et al., 2017) which places at its core the wellbeing of individuals, thus going beyond the merely economic growth perspective. The study carefully selects a number of key economic and social variables that aim to capture the resilience capacities of our society. Resilience is measured by investigating the dynamic response of these variables to the crisis in the short and medium run. In particular, we define four resilience indicators: the impact of the crisis, the recovery, the medium-run, and the ‘bouncing forward’. Results from a narrow exercise focusing on macroeconomic and financial variables confirm the validity of the proposed measurement approach: Germany appears to be among the most resilient countries; Ireland, after having been severely hit, shows a good absorptive capacity; Italy seems to be still struggling with the recovery, while Greece remains the most affected. After measuring resilience, we identify underlying country characteristics that may be associated with resilient behaviour. As such, these could indicate entry points for policies to increase countries' resilience to economic and financial shocks.