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Fiscal multipliers in downturns and the effects of Euro Area consolidation

Research output: Contribution to journalArticle

Author(s)

Sebastian Gechert, Andrew Hughes Hallett, Ansgar Rannenberg

School/Research organisations

Abstract

We estimate the impact of the fiscal consolidation actions in the Euro Area between 2011 and 2013 on output and public finances. We identify the discretionary fiscal consolidation effort based on new data by the European Commission. We combine these data with robust estimates from a rich meta-regression analysis on multipliers for various fiscal measures under different business cycle regimes. The frontloaded consolidation came at a considerable cost with an output loss of 7.7% and only a small gain to the primary balance of 0.2% of GDP. Backloading would have been much less costly due to lower multipliers.
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Details

Original languageEnglish
Pages (from-to)1138-1140
Number of pages3
JournalApplied Economics Letters
Volume23
Issue number16
Early online date2 Feb 2016
DOIs
Publication statusPublished - 2016

    Research areas

  • Fiscal policy, Fiscal multipliers, Fiscal consolidation, Euro Area, E27, E62, H30

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