Non-Keynesian Fiscal Adjustments? A Close Look at Expansionary Fiscal Consolidations in the EU

Giudice, Gabriele; Turrini, Alessandro; Veld, Jan in’t

doi:10.1007/s11079-007-9026-8

Cited by 57 publications

(39 citation statements)

References 19 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…There is a large empirical literature devoted to the expansionary fiscal adjustments based on a descriptive analysis of the characteristics of fiscal components and other related macroeconomic variables, such as GDP and interest rate before, during, and after the fiscal adjustment period (Alesina & Ardagna, 1998;2010;Alesina & Perotti, 1995;1997;Giudice et al, 2007;McDermott & Wescott, 1996). The authors often used binary dependent variable models, such as logit or probit to analyze which factors determine the success of fiscal consolidations (McDermott & Wescott, 1996;Afonso et al, 2006) and confirm their expansionary effects (Alesina & Ardagna, 1998;Giudice et al, 2007).The majority of authors claimed that better effects of fiscal consolidations are achieved through sharp reductions in government expenditure than tax increases. Similarly, Blanchard & Perotti (2002) using a mixed structural VAR/event study approach, showed positive effects of government expenditure cuts on U.S. economic growth in the post-war period.…”

Section: Description Of Research Methodology Based On the Empirical Smentioning

confidence: 99%

The Myth of Austerity. Empirical Evidence from the Eurozone Countries

Wildowicz-Giegiel

2019

E-Finanse

View full text Add to dashboard Cite

show abstract

Section: Description Of Research Methodology Based On the Empirical Smentioning

confidence: 99%

The Myth of Austerity. Empirical Evidence from the Eurozone Countries

Wildowicz-Giegiel

2019

E-Finanse

View full text Add to dashboard Cite

show abstract

“…Large parts of the studies mentioned above, tend to confirm that expenditure cut-based adjustment programmes are more effective than that of tax hike-based ones in both boosting confidence and output (see Alesina and Perotti, 1995, 1997, 1998Giavazzi and Pagano, 1996;McDermott and Wescott, 1996;Perotti, 1998;Afonso et al, 2006;Giudice et al, 2007;Ardagna, 2010, 2013; Afonso and Jalles, 2012; Hernández de Cos and Moral-Benito, 2013, among others). However, it is worth mentioning that there are few studies, such as Briotti (2002), Baldacci et al (2004), and Mati and Thornton (2008), which reveal opposite results.…”

Section: Review Of the Empirical Literaturementioning

confidence: 99%

Does fiscal consolidation promote economic growth and employment? Evidence from the PIIGGS countries

Arestis

Kaya

Şen

2018

European Journal of Economics and Economic Policies: Intervention

View full text Add to dashboard Cite

Using annual data over the period 1980–2014, this paper attempts to provide an answer to the question of whether fiscal consolidation promotes growth and employment in the context of the PIIGGS countries (Portugal, Ireland, Italy, Greece, Great Britain, and Spain) by using the Bootstrap Granger causality analysis proposed by Kónya (2006), which allows testing for causality on each individual country separately, and by accounting for dependence across countries. Our findings indicate that in no country considered does fiscal consolidation promote growth. However, fiscal consolidation negatively affects employment in Portugal and Italy, whereas it positively influences employment in Great Britain. Based on our findings, we may suggest that the effects of fiscal consolidation on employment produce mixed results, varying from country to country.

show abstract

“…Papers that stress the positive impact of consolidation include Giudice et al (2007) who look at large consolidations in the EU, and find that confidence effects occur quite frequently -in up to half of all consolidation episodes. They also find that consolidation was more likely to be expansionary if based on spending cuts rather than revenue increases.…”

Section: Related Literaturementioning

confidence: 99%

The growth impact of discretionary fiscal policy measures

Attinasi

Klemm

2016

Journal of Macroeconomics

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may THE GROWTH IMPACT OF DISCRETIONARY FISCAL POLICY MEASURES Maria Grazia Attinasi and Alexander KlemmIn 2014 all ECB publications feature a motif taken from the €20 banknote.NOTE: This Working Paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily refl ect those of the ECB. AcknowledgementsWe are grateful to the ESCB's Working Group on Public Finance (WGPF) for authorising the use of data from the 'disaggregated approach' for this study. These data are confi dential, and therefore they are not reported herein. The opinions expressed herein are those of the authors and do not necessarily refl ect those of the European Central Bank or the Eurosystem. The views expressed herein are those of the authors and should not be attributed to the IMF, its Executive Board, or its management. Maria Grazia AttinasiEuropean Central Bank; maria_grazia.attinasi@ecb.int Alexander KlemmInternational Monetary Fund; e-mail: aklemm@imf.org ABSTRACTThis paper looks at the impact of discretionary fiscal policy on economic growth for a sample of 18 EU countries over the period 1998-2011. The main novelty of this paper is the use, on the revenue side, of a dataset of fiscal measures based on the yield of actual legislative and budgetary measures, rather than approximations, such as changes in cyclically-adjusted variables. Using static and dynamic panel data techniques, we find that fiscal consolidation can be a drag on economic growth in the short-term, although some specific budget categories are not found to be statistically significant. In general, the results also indicate that expenditurebased adjustment tends to be less harmful than revenue-based adjustment. Among expenditure cuts, reductions in government investment and consumption are found to be growth reducing. Among revenues, indirect tax increases are found to have a particularly strong negative impact. Dynamic specifications suggest that consolidation reduces growth mainly in the year of fiscal adjustment, while future growth rates are affected only through the usual time persistence. Nonlinear specifications indicate that spreading out consolidation reduces the negative impact on growth, but only very slightly and in the absence of financial market pressures and/or fiscal sustainability considerations. Additionally, front-loading fiscal consolidation appears to be less detri...

show abstract

Non-Keynesian Fiscal Adjustments? A Close Look at Expansionary Fiscal Consolidations in the EU

Abstract: Fiscal consolidations, EU fiscal policy, Non-Keynesian effects of fiscal policy, E63, H30, H63,

Cited by 57 publications

References 19 publications

The Myth of Austerity. Empirical Evidence from the Eurozone Countries

The Myth of Austerity. Empirical Evidence from the Eurozone Countries

Does fiscal consolidation promote economic growth and employment? Evidence from the PIIGGS countries

The growth impact of discretionary fiscal policy measures

Contact Info

Product

Resources

About