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Budgetary policy in the countries of the European Union in the 1990s

Author

Listed:
  • Paola Caselli

    (Banca d'Italia)

  • Roberto Rinaldi

    (Banca d'Italia)

Abstract

The paper examines the steps taken in the EU countries during the 1990s to adjust the public finances, describing their main characteristics on the basis of the measures’ impact on expenditure and revenue. It also attempts to estimate the possible “non-Keynesian” effects of the budgetary measures adopted and of their composition on economic activity. These effects supposedly emerge via expectation regarding disposable income and/or via the competitiveness of the single economies. Alongside cases, including that of Italy, in which the traditional “Keynesian” effects appear to have dominated, there are cases in which deficit reduction has been accompanied by satisfactory macroeconomic results. The evidence does not refute the thesis that, in an appropriate economic policy context, suitably designed budgetary tightening can generate expansionary effects on private consumption and production.

Suggested Citation

  • Paola Caselli & Roberto Rinaldi, 1998. "Budgetary policy in the countries of the European Union in the 1990s," Temi di discussione (Economic working papers) 334, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_334_98
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    File URL: http://www.bancaditalia.it/pubblicazioni/temi-discussione/1998/1998-0334/tema_334_98.pdf
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    Keywords

    budgetary policy; European Union;

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