Fiscal consolidation in the EU-28: Multiyear versus cold-shower episodes

Abstract

In the aftermath of the global recession, the need for fiscal consolidation in order to reduce budget deficits and the public debt has intensified, but with the aim to make the measures applied not affect the further slowdown of the economic activity in the European Union (EU) economies. In this paper, the episodes of the fiscal consolidation in the period from 1990 to 2015 in the 28 EU economies are analyzed, differentiating the multiyear episodes against the one-year (i.e. cold shower) episodes and their effects before and after the global recession. The episodes of the fiscal consolidation that result in successful (a reduction in the cyclically-adjusted primary budget deficit) and expansionary effects (the GDP growth) are identified, thus empirically confirming the existence of non-Keynesian effects. The stated affirms the idea that the achievement of fiscal sustainability by using austerity measures does not necessarily imply contractions in economies and that the development of a fiscal architecture in the EU by establishing complementarity between the national and supranational fiscal rules is of extraordinary importance in the post-crisis period.

Effectiveness of bail-out mechanisms in the Eurozone: Global vs. pandemic crisis

“…In relation to the literature dealing with measures to help against the current pandemic crisis, Batini et al (2020) argue concerning rapid and joint EU reaction in the need to unite and overcome the crisis as painlessly as possible. Glavaški and Beker Pucar (2020) also emphasize the importance of strengthening the fiscal framework, stimulating the coordination between national and supranational fiscal arrangements. Acharya et al (2020) stress the importance of the banking system for overcoming the crisis caused by the Covid-19 pandemic.…”

“…According to Glavaški and Beker Pucar (2020), the global recession has highlighted all the shortcomings of the unfinished EU project. Hence, how did those circumstances affect the Eurozone?…”

“…The implementation of the programs was monitored by the Troika, which consisted of the European Commission, the International Monetary Fund (IMF) and the ECB, while users were Greece, Ireland, Portugal, Spain, and Cyprus (Table 1). Glavaški & Beker Pucar (2020).…”

The Impact of Corporate Income Tax on Fdi Inflow in Emerging Eu Economies

“…Within the EU, toward elimination of harmful competition between members, there are tendencies for tax harmonization (Gropp & Kostial, 2001). Glavaški & Beker Pucar (2020) pointed out that strengthening the fiscal framework is necessary due to the shortcomings of unfinished EU project that were visible after global financial crisis.…”

“…The race for tax competitiveness was causing problems within the EU. Especially as Glavaški & Beker Pucar (2020) pointed out the global recession has highlighted all the shortcomings of the unfinished EU project. Namely, lowering tax rates generates various problems within the EU single market with regard to the free movement of people, goods, services and capital, of which the movement of capital is crucial.…”