Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/106006
Authors: 
Truger, Achim
Year of Publication: 
2014
Series/Report no.: 
IMK Working Paper 140
Abstract: 
Fiscal policy in the Euro area is still dominated by austerity measures implemented under the institutional setting of the 'reformed' stability and growth pact, and the even stricter 'fiscal compact'. At the same time, calls for a more expansionary fiscal policy to overcome the economic crisis have become more frequent, recently. Therefore, the article tries to assess the remaining leeway for a truly expansionary fiscal policy within the existing institutional framework. Special emphasis is put on the method of cyclical adjustment employed by the European commission in order to assess member states' fiscal position and effort. It turns out that even in the existing framework the leeway for a macroeconomically and socially more sensible fiscal policy using the interpretational leeway inherent in the rules is quite substantial.
Subjects: 
fiscal policy
austerity
cyclical adjustment of public finances
Euro area
JEL: 
E61
E62
E65
H62
H63
Document Type: 
Working Paper

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