Euro Area: the long way of recovery

The Euro Area economy marked an inflexion point during 2Q2013, after the prolonged recession determined by the public debt crisis and its consequences. However, the economic divergence among the member countries persists and the recovery process seems anemic and uneven. In this paper we employ the Cobb-Douglas methodology, the Hodrick-Prescott filter and the ARIMA models in order to estimate the potential GDP and forecast the medium-run evolution of the Euro Area economy. According to our results, the Euro Area economic recovery process would be long, as the potential GDP pace would continue to be below the pre-crisis (Great Recession) period at least until 2016. (C) 2015 Published by Elsevier B.V.