Edward P. Lazear: The Euro Crisis—Doubting the 'Domino' Effect - WSJ.com

Edward P. Lazear: The Euro Crisis—Doubting the 'Domino' Effect - WSJ.com: "The cases of Estonia and Turkey attest to the effectiveness of structural change. After a significant economic contraction in 2001, Turkey embarked on a new path of rapid fiscal consolidation. By the end of 2002, growth was 6% and by 2004, 9%. Rather than slowing the economy further, government tightening was associated with strong and almost immediate growth. More recently, Estonia, which experienced almost a 20% contraction by the end of 2009, instituted fiscal reforms. Among them was a 10% reduction in government operating expenses and a flattening of the pension growth trajectory. In 2010, the year following the reforms, growth had already turned positive, to around 3%, and it is forecast to be above 6% for 2011.

These two examples, and that of our own financial crisis, suggest that fundamental problems need to be addressed early and forcefully"

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