Abstract
The transition phase to EMU hasbeen accompanied by considerable monetaryand fiscal consolidation efforts in the EU.This paper analyses this consolidationprocess and its effects on economicactivity in the EU. It is tested to what extent fiscal retrenchment efforts havedepressed or stimulated private spending. Inthe case of the latter non-Keynesian effectsdominate the traditional Keynesianexpenditure effects of government spending,taxation and transfer payments.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Aarle, B., van and Garretsen, H. (2000). Keynesian, non-Keynesian or no effects of fiscal policy changes? The EMU case, mimeo.
Abel, A. (1983). Optimal investment under uncertainty. American Economic Review 73: 228-233.
Abel, A. and Blanchard, O. (1983). An intertemporal model of saving and investment. Econometrica 51: 675-692.
Alesina, A. and Ardagna, S. (1998). Tales of fiscal adjustment. Economic Policy 27: 489-545.
Alesina, A., De Broeck, M., Pratti, A. and Tabellini, G. (1992). Default risk on government debt in OECD countries. Economic Policy October: 427-451.
Alesina, A. and Perotti, R. (1995). Fiscal expansions and adjustments in OECD countries. Economic Policy 21: 207-240.
Alesina, A. and Perotti, R. (1996). Reducing budget deficits. Swedish Economic Policy Review 3: 115-134.
Alesina, A. and Perotti, R. (1997). Fiscal adjustments in OECD countries: Composition and macroeconomic effects. IMF Staff Papers 44: 210-247.
Alesina, A., Perotti, R. and Tavares, J. (1998). The political economy of fiscal adjustment. Brookings Papers on Economic Activity pp. 197-266.
Aprahamiam, F. and Paraponaris, A. (1998). Consommation privée, dette publique et structure à terme des taux d'intérê t-L'Exemple de la France et de l'Italie. Revue Économique 49: 687-698.
Ardagna, S. (1999). Fiscal stabilizations: When do they work and why. Unpublished paper.
Bahmani-Oskooee, M. (1999). Do federal budget deficits crowd out or crowd in private investment? Journal of Policy Modeling 21: 633-640.
Bertola, G. and Drazen, A. (1993). Trigger points and budget cuts: Explaining the effects of fiscal austerity.American Economic Review 83: 11-26.
Bhattacharya, R. (1999). Private sector behavior and non-Keynesian effects of fiscal policy. IMF WP 99/112, August.
Blanchard, O. (1990a). Comment on Giavazzi F. and PaganoM.: Can severe fiscal contractions be expansionary? Tales of two small European countries. NBER Macroeconomics Annual pp. 111-116.
Blanchard, O. (1990b). Suggestions for a new set of fiscal indicators. OECD Working Papers, no. 79.
Blinder A. and Deaton, A. (1985). The time series consumption function revisited. Brookings Papers on Economic Activity 2: 465-511.
Dalamagas B. (1993). Fiscal effectiveness and debt illusion in a rational expectations model. Annales d'Economie et de Statistique 31: 129-146.
European Commission (1998). Statistical annex, European economy no. 65. Brussels: Directorate for Economic and Financial Affairs.
Giannaros, D., Kolluri, B. and Panik, M. (1999). An empirical analysis of the effects of government spending on capital investment: Evidence from OECD countries. International Economic Journal 13: 45-55.
Giavazzi, F. and Pagano, M. (1990). Can severe fiscal contractions be expansionary? A tale of two small economies. NBER Macroeconomics Annual pp. 75-116.
Giavazzi, F. and Pagano, M. (1996). Non-Keynesian effects of fiscal policy changes: International evidence and the Swedish experience. Swedish Economic Policy Review 3: 69-103.
Giavazzi, F., Japelli, T. and Pagano, M. (2000). Searching for non-linear effects of fiscal policy: Evidence from industrial and developing countries. European Economic Review 44: 1259-1289.
Hayashi, F. (1982). Tobin's marginal q and average q: A neoclassical interpretation. Econometrica 50: 213-224.
Heylen F. (1997). A contribution to the empirical analysis of the effects of fiscal consolidation: Explanation of failure in Europe in the 1990s. RUG WP no. 97/32, June
McDermott, J. and Wescott, R. (1996). An empirical analysis of fiscal adjustments. IMF Staff Papers 43: 725-753.
Mongelli, F. (1999). The effects of the European Economic and Monetary Union (EMU) on national fiscal sustainability. Open Economies Review 10: 31-61.
Nicoletti G. (1988). Private consumption, inflation and the 'debt neutrality hypothesis': The case of eight OECD countries'. OECD Department of Economics and Statistics Working Paper no. 50.
Nicoletti G. (1992). Is tax-discounting stable over time? Oxford Bulletin of Economics and Statistics 54: 121-142.
OECD (1999). Fiscal positions and business cycle statistics. Paris: Organisation for Economic Development and Cooperation.
Perotti, R. (1999). Fiscal policy in good times and bad. Quarterly Journal of Economics 109: 1399-1436.
Sutherland, A. (1995). Fiscal crises and aggregate demand: Can high public debt reverse the effects of fiscal policy? Journal of Public Economics 65: 147-162.
Zaghini A. (1999). The economic policy of fiscal consolidation: The European experience. Paper presented at the EEA-conference, Spain, September.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Gobbin, N., van Aarle, B. Fiscal Adjustments and Their Effects During the Transition to the EMU. Public Choice 109, 269–299 (2001). https://doi.org/10.1023/A:1013064820125
Issue Date:
DOI: https://doi.org/10.1023/A:1013064820125