Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/170655
Authors: 
Perdichizzi, Salvatore
Year of Publication: 
2017
Series/Report no.: 
Working Paper 58
Abstract: 
During the sovereign debt crisis, all euro countries have deployed \aus- terity packages", believing that they could regain the path of growth im- plementing structural reforms and cutting government spending. Such policies should have led to an initial decline in GDP followed by recov- ery and a reduction of the debt to gdp ratio. A key issue is the size of fiscal multipliers when the economy is in recession. We estimate a non- linear model allowing variations based on the state of the economy and we control for the macroeconomic characteristics across the Euro Area. The empirical evidence suggests that, an increase in government spending will be particularly effective to boost aggregate demand, increase private consumption and investment in the short-to-medium run, without raising the debt to gdp ratio but rather decreasing it.
Subjects: 
Fiscal Multipliers
State-Dependent
Fiscal Policy
Public Finance
JEL: 
E32
E62
Document Type: 
Working Paper

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