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The Legacy of Austerity in the Eurozone

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  • De Grauwe, Paul
  • Ji, Yuemei

Abstract

The recent slight improvement in the GDP growth rates in the eurozone has led European policy-makers to proclaim victory and assert that the austerity programmes imposed within the eurozone are paying off. But is this really the case? In this Commentary Paul De Grauwe and Yuemei Ji argue that the improvement in the eurozone business cycle is the result of the ECB’s announcement of its Outright Monetary Transaction (OMT) programme, and that austerity has left a legacy of unsustainable debt that will test the political resilience of the debtor countries.

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  • De Grauwe, Paul & Ji, Yuemei, 2013. "The Legacy of Austerity in the Eurozone," CEPS Papers 8472, Centre for European Policy Studies.
    • Handle: RePEc:eps:cepswp:8472
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    File URL: http://www.ceps.eu/system/files/PGD%20%2526%20YJ%20Austerity.pdf
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    References listed on IDEAS

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    1. Alan J. Auerbach & Yuriy Gorodnichenko, 2012. "Fiscal Multipliers in Recession and Expansion," NBER Chapters, in: Fiscal Policy after the Financial Crisis, pages 63-98, National Bureau of Economic Research, Inc.
    2. Mr. Daniel Leigh & Mr. Andrea Pescatori & Mr. Jaime Guajardo, 2011. "Expansionary Austerity New International Evidence," IMF Working Papers 2011/158, International Monetary Fund.
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    Cited by:

    1. Albonico, Alice & Paccagnini, Alessia & Tirelli, Patrizio, 2016. "In search of the Euro area fiscal stance," Journal of Empirical Finance, Elsevier, vol. 39(PB), pages 254-264.
    2. Afonso, Sérgio, 2016. "A More Precise Approach to Fiscal Consolidation and Sustainability," MPRA Paper 69072, University Library of Munich, Germany.
    3. Ernesto Longobardi & Antonio Pedone, 2018. "On some recent proposals of public debt restructuring in the Eurozone," Chapters, in: Giuseppe Eusepi & Richard E. Wagner (ed.), Debt Default and Democracy, chapter 6, pages 84-123, Edward Elgar Publishing.
    4. 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.
    5. Jakub Jedlinský & Ingeborg Němcová, 2017. "Modelling the Effects of a Predictable Money Supply of Bitcoin [Modelování efektů předvídatelné měnové zásoby Bitcoinu]," Acta Informatica Pragensia, Prague University of Economics and Business, vol. 2017(2), pages 138-161.
    6. Scharpf, Fritz W., 2016. "Forced structural convergence in the eurozone: Or a differentiated European monetary community," MPIfG Discussion Paper 16/15, Max Planck Institute for the Study of Societies.
    7. Weiss, Stefani & Heinemann, Friedrich & Berger, Melissa & Harendt, Christoph & Moessinger, Marc-Daniel & Schwab, Thomas, 2017. "How Europe can deliver: Optimising the division of competences among the EU and its member states," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 179116.

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