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Back to the Future: Lessons from the 2009–2012 austerity policies for the aftermath of the COVID crisis

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  • Alfredo Arahuetes García
  • Gonzalo Gómez Bengoechea

Abstract

This paper studies the relationship between austerity intensity and adjustment processes in the Eurozone in the period 2000–2021. We empirically analyse fiscal consolidation and its impact on a set of internal adjustment and expansionary austerity indicators. We also evaluate the relationship of those indicators with GDP growth using quantile regressions. Results show that austerity programmes had a negative impact on growth both in the short‐run and in the long‐run. Expansionary austerity indicators play a more relevant role in determining short‐term growth than internal adjustment. This effect is more intense in slow‐growing countries since internal adjustment processes take more time to operate.

Suggested Citation

  • Alfredo Arahuetes García & Gonzalo Gómez Bengoechea, 2022. "Back to the Future: Lessons from the 2009–2012 austerity policies for the aftermath of the COVID crisis," Global Policy, London School of Economics and Political Science, vol. 13(5), pages 751-766, November.
    • Handle: RePEc:bla:glopol:v:13:y:2022:i:5:p:751-766
    DOI: 10.1111/1758-5899.13129
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