Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154449
Authors: 
Lalik, Magdalena
Year of Publication: 
2017
Series/Report no.: 
ECB Working Paper 2016
Abstract: 
The paper presents a model-based assessment of fiscal multipliers operating in the euro area during the period 2011-2014. The assessment is conditional on two distinct reactions of the sovereign risk premium (either responding endogenously to fiscal shocks or being an exogenous process) and two types of monetary policy (accommodative and non-accommodative). Applying those multipliers to the amount of austerity measures implemented in years 2011-14, the paper evaluates their possible fallouts and shows that the output effects of the recent fiscal consolidations were largely determined by two key factors: financial markets’ sentiments and the composition of adopted measures. Finally, the paper also highlights the importance of modelling of government’s interest payments for predicting the evolution of debt-to-GDP ratios.
Subjects: 
debt dynamics
euro area
Fiscal multiplier
macroeconomic models
sovereign risk premium
JEL: 
E42
E32
F42
F45
Document Type: 
Working Paper

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