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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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Sarkozy s economic policy

Sarkozy’s Economic Policy

CES, November 1, 2007

Solving problems

Solving Problems

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

Caveat beware of economic statistics

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

We are a great nation

We are a great nation …

… but we are losing ground

Well being log real gdp per capita

Well-Being: log real gdp per capita

Keeping up with the joneses

Keeping up with the Joneses

Keeping up with joneses 2

Keeping Up with Joneses 2

Trade openness

Trade Openness

Sarkozy s economic policy

FDI flows

Foreign direct investment inflow 06

Foreign Direct Investment Inflow 06

Portfolio investment

Portfolio Investment



Why are we losing ground

Why are we losing ground?

We are highly productive ….

Labor productivity trends

Labor Productivity Trends

Tfp growth in services

TFP Growth in Services

But we don t

… but we don’t

  • Work as many hours

  • Work as many years

  • Put as many people to work

Annual hours worked per capita

Annual Hours Worked per capita

Hours worked change over 3 decades

Hours worked change over 3 decades

Sarkozy s economic policy

Current Unemployment

Tax wedge

Tax Wedge

Government spending and debt

Government Spending and Debt

Additional budget from ageing population

Additional Budget from Ageing Population

Growth of public debt

Growth of Public Debt

Policy implications

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

Policy implications 2

Policy Implications 2

  • Demand Side (plus incentives)

    • Mortgage Deduction

    • Inheritance tax reduction

    • Fiscal Shield Reduction

    • Total cost: 8 bneuros

Policy implications 3

Policy Implications 3

  • Deficit Reduction

    • Medical copays

    • End special regimes, increase contribution time

    • Social VAT??

  • Purchasing Power

    • Galland, Raffarin, and Royer Laws

Policy implications 4

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

Purchasing power career incentives

Purchasing Power & Career Incentives

Consumer price index

Consumer Price Index

Income and wealth distribution

Income and Wealth Distribution

Earnings dispersion

Earnings Dispersion

Earnings dispersion1

Earnings Dispersion

Unionization rate

Unionization Rate

Min wage inv rel to union rate

Min Wage inv. Rel. to Union rate

Pct workers paid minimum wage

Pct workers paid minimum wage

Research development

Research & Development

Sarkozy s economic policy

“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

Extra data

Extra Data

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