“…This implies that if there is an increase in public investment in the EMU (e.g., the so-called Juncker Plan ) that is not evenly distributed across countries, then countries with close trade linkages may still benefit from spillovers. 4 To investigate the issues above, we extend the fiscal policy analytical capabilities of a global DSGE model, the EAGLE ( Gomes et al, 2012 ), by introducing complementarity of government and private consumption and allowing government investment to be productive, as outlined above. Moreover, we allow for a direct import content of government spending, which takes into account that some government purchases in small open economies are on imported goods.…”