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It's not austerity. Or is it? Assessing the effect of austerity on growth in the European Union, 2010-15

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  • Fragetta, Matteo
  • Tamborini, Roberto

Abstract

We present a new econometric study of the effects of fiscal austerity on growth from 2010 to 2015 in a panel of the EU countries and the US as a proxy for the rest of the world, controlling for other conditioning factors put forward in the ”it's not austerity” view of the prolonged EU depression (low growth trend, loss of competitiveness, high sovereign debt and spread, excess taxation). Austerity remains significant with a negative effect in a range between 0.65 and 1.57 in the short run, and with spending cuts less harmful in the long run.

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  • Fragetta, Matteo & Tamborini, Roberto, 2019. "It's not austerity. Or is it? Assessing the effect of austerity on growth in the European Union, 2010-15," International Review of Economics & Finance, Elsevier, vol. 62(C), pages 196-212.
    • Handle: RePEc:eee:reveco:v:62:y:2019:i:c:p:196-212
    DOI: 10.1016/j.iref.2019.03.013
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    Cited by:

    1. Tamborini, Roberto & Tomaselli, Matteo, 2020. "The determinants of austerity in the European Union 2010–16," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    2. Roberto Tamborini & Matteo Tomaselli, 2020. "When does public debt impair economic growth? A literature review in search of a theory," DEM Working Papers 2020/7, Department of Economics and Management.
    3. Rant, Vasja & Marinč, Matej & Porenta, Jan, 2021. "Debt and convergence: Evidence from the EU member states," Finance Research Letters, Elsevier, vol. 39(C).
    4. Zareh Asatryan & Xavier Debrun & Annika Havlik & Friedrich Heinemann & Martin G. Kocher & Roberto Tamborini, 2018. "Which Role for a European Minister of Economy and Finance in a European Fiscal Union?," EconPol Policy Reports 6, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.

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    More about this item

    Keywords

    EMU; Fiscal consolidation; Panel time series;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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