000			02972nam a22003977u 4500
001			pwiiw7016
003			OSt
005			20260406120009.0
008			241007t2024 au ||||| |||| 00| ||eng d
040			_cOSt
041			_aeng
084			_aH30 _aH63 _aO47 _2jelc
100	1		_aHeimberger, Philipp
245	1	0	_aFiscal consolidation and its growth effects in euro area countries: Past, present and future outlook
260			_aWien : _bWiener Institut für Internationale Wirtschaftsvergleiche (wiiw), _c2024.
300			_a36 S., _b11 Table and 8 Figures, _c30cm.
490	1		_awiiw Working Papers _v253
520			_aThis paper is about fiscal consolidation measures (i.e. tax hikes and government spending cuts motivated by a desire to reduce the fiscal deficit and public debt) in euro area (EA) countries. The focus is on analysing the growth effects of fiscal adjustments as well as their implications for debt sustainability assessments. I discuss the size and composition of fiscal consolidation by distinguishing three periods: the run-up to the EA, when governments faced the Maastricht criteria for joining the monetary union (1992-1998); before and during the recession triggered by the global financial crisis (1999-2009); and the euro crisis (with a specific focus on the 2011-2013 period). The empirical evidence on the growth effects of fiscal consolidation shows that while fiscal adjustments are contractionary, the negative growth effects were particularly strong and persistent during the euro crisis. With regard to the austerity outlook, I show that, beginning in 2025, EA countries are set to implement fiscal consolidations over multiple years so as to meet reformed EU fiscal rules. The adjustment requirements for some member countries are large in historical comparison. The paper argues that the framework for debt sustainability analysis at the heart of the reformed EU fiscal rules downplays the domestic growth impacts of fiscal adjustments and ignores cross-country spill-overs that magnify domestic growth effects. In all likelihood, the reformed framework underestimates the negative growth effects of fiscal consolidation. I conclude that implementing the multi-year fiscal adjustments required to meet EU fiscal rules may not reduce public debt ratios across the EA’s member countries, as the European Commission expects, and that the economic and political implications of austerity may complicate the governance of a fragile EA.
650			_aFiscal policy
650			_afiscal consolidation
650			_afiscal multiplier
650			_agrowth
650			_apublic debt
650			_aeuro area
651			_aAustria
651			_aEuro Area
651			_aFrance
651			_aGermany
651			_aItaly
651			_aNetherlands
651			_aSpain
690			_aMacroeconomic Analysis and Policy
830		0	_v253 _w7703 _twiiw Working Papers
856	4	0	_uhttps://wiiw.ac.at/p-7016.html
942			_cP
999			_c9106 _d9106