Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/162673
Authors: 
Attinasi, Maria-Grazia
Lalik, Magdalena
Vetlov, Igor
Year of Publication: 
2017
Series/Report no.: 
ECB Working Paper 2040
Abstract: 
The fiscal consolidation measures adopted in many euro area countries over 2010-13 reduced excessive domestic fiscal imbalances, but came at the cost of short-term output losses. This simultaneous tightening of fiscal policy raised concerns that such output losses might be exacerbated by negative spillovers from other countries. This paper presents some model-based simulations for the euro area with a view to gauge the cross-country impact of the fiscal measures adopted over 2010-13. The paper finds that the output effects of the fiscal consolidation were heterogeneous across countries, reflecting the different amounts and composition of fiscal measures adopted. We find that the trade channel is able to generate sizeable cross-border fiscal spillovers in the euro area. However, once the analysis takes into account the remaining channels (e.g. monetary policy reaction, exchange rate, and risk premium) total spillovers are estimated to be relatively small. In general, when compared to the growth fallout of domestic fiscal policies, negative fiscal spillovers do not seem to have added much to the economic growth woes of vulnerable countries.
Subjects: 
fiscal consolidation
policy spillovers
macroeconomic models
euro area
JEL: 
E42
E32
F42
F45
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-2762-8
Document Type: 
Working Paper

Files in This Item:
File
Size
722.04 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.