Cover -- CONTENTS -- YOUTH UNEMPLOYMENT IN EUROPE: OKUN'S LAW AND BEYOND -- A. Context -- B. Stylized Facts -- C. Determinants -- D. The Business Cycle -- E. Labor Market Features -- F. Conclusions and Policy Recommendations -- BOXES -- 1. SMEs. The Role of Financing Constraints and Youth Unemployment -- 2. A Historical Perspective on Growth and Youth Unemployment -- REFERENCES -- ANNEXES -- 1. Data Definitions -- 2. Methodology -- INVESTMENT IN THE EURO AREA: WHY HAS IT BEEN WEAK? -- A. Investment in the Euro Area: Post-crisis Trends -- B. Drivers of Investment: Output Changes versus Other Factors -- C. Conclusions -- REFERENCES -- APPENDICES -- 1. Data -- 2. Results of the Accelerator Model -- 3. Results of the Neoclassical Model -- 4. Results of the Bond Market Model -- CAPITAL MARKET DEVELOPMENT: SME FINANCING IN THE EURO AREA -- A. Background -- B. Rationale for Securitization of SME Loans -- C. Impediments to SME Securitization Markets -- D. Relative Performance -- E. Lessons from Previous SME Support Programs -- F. Recent Efforts -- G. Suggested Measures to Facilitate the Development of SME Securitization -- H. Conclusion -- BOXES -- 1. Overview of the European Securitization Market -- 2. Regulatory Hurdles -- FIGURE -- 1. Securitization in Europe -- REFERENCES -- ANNEXES -- 1. Public Sector Support for SME Securitization -- 2. Definining High-quality Securitization (HQS) -- 3. Selected Official Sector Support for Securitization in Europe -- 4. Selected Official Sector Support for SME Finance in Europe -- EXTERNAL REBALANCING IN THE EURO AREA: DEVELOPMENTS AND POLICIES -- A. Introduction -- B. Financing Needs and the Current Account -- C. Model-based Saving and Investment Imbalances in the Euro Area -- D. Good and Bad Ways to Achieve External Rebalancing -- E. Concluding Remarks -- BOX.

1. A Model-based Analysis of National Saving and Investment Behavior -- FIGURES -- 1. Regional Composition of the Euro Area Current Account -- 2. The Sectoral Composition of the Euro Area Current Account -- 3. The Sectoral Composition of the Current Account in Creditor Economies -- 4. The Sectoral Composition of the Current Account in Debtor Economies -- 5. The Sectoral Composition of the Current Account in Other Debtor Economies -- 6. The Composition of Net Capital Inflows by Euro Area Economy Group -- 7. The Composition of Net Foreign Assets by Euro Area Economy Group -- 8. Model-Implied Investment and Saving Residuals and the EBA Assessment of Current Account Imblances -- TABLES -- 1. Net Foreign Assets and Current Accounts in the Euro Area Economies -- 2. Average Real Return Difference between Foreign Assets and Liabilities, Euro Area Economies 1999-2012 -- 3. Regression Results for Investment Model -- 4. Regression Results for Saving Model -- 5. A Desired Rebalancing Scenario -- 6. A "Bad" Rebalancing Scenario -- A1. Data Sources and Estimation Sample for the Saving and Investment Regressions -- REFERENCES -- FISCAL GOVERNANCE IN THE EURO AREA: PROGRESS AND CHALLENGES -- A. The Setting: Public Debt on an Upward Trend -- B. Past Reforms of the Fiscal Framework -- C. Track Record under the SGP -- D. Pending Issues and Areas for Further Progress -- E. Issues for Discussion and Policy Options -- F. Conclusions -- BOXES -- 1. The Trade-Off Between Fiscal Consolidation and Structural Reforms -- 2. How to Move Forward with the Structural Balance Indicator -- FIGURES -- 1. Non-compliance with European Fiscal Rules -- 2. Public Debt -- 3. Structural Balance and Output Gap -- 4. Supranational Constrains and Rules on Fiscal Aggregates -- 5. Real-Time Estimation Error of the Output Gap -- 6. Investment in the Euro Area.

7. Euro Area: Share of "Non-Compliers" -- TABLE -- 1. The Decomposition of Debt Changes in the Euro Area 2008-13 -- REFERENCES.