Fiscal Policies in High Debt Euro-Area Countries

Description

This book explores the role of national fiscal policies in a selected group of Euro-area countries under the European Economic and Monetary Union (EMU). In particular, the authors characterize the response of output to fiscal consolidations and expansions in the small Euro-area open economies affected by high public and private debt. It is shown that the macroeconomic outcome of fiscal shocks is strongly related to debt levels. The Euro-area countries included in the investigation are Greece, Ireland, Italy, the Netherlands, Spain, and Portugal, over the sample period 1999–2016, i.e., the EMU period. The main econometric tools used in this research are structural vector autoregressive (VAR) models, including panel VAR models. The available literature relating to the subject is also fully reviewed. A further closely investigated topic is the potential spillover effects of German fiscal policies on the selected small Euro-area economies. Moreover, in the perspective of the evolution of the Euro Area towards a full Monetary and Fiscal Union, the authors study the effects of area-wide government spending shocks on aggregate output and other macroeconomic variables during the EMU period. The closing chapter of the book considers evidence on the consequences of austerity policies for European labour markets during recent years. Front Matter ....Pages i-x Introduction (Antonella Cavallo, Pietro Dallari, Antonio Ribba)....Pages 1-10 The Common Framework for National Fiscal Policies and the Euro Area Fiscal Union (Antonella Cavallo, Pietro Dallari, Antonio Ribba)....Pages 11-49 The Macroeconomic Effects of Fiscal Policy Shocks: A Review of the Literature (Antonella Cavallo, Pietro Dallari, Antonio Ribba)....Pages 51-84 The Macroeconomic Effects of Fiscal Shocks in High Debt Euro Area Countries (Antonella Cavallo, Pietro Dallari, Antonio Ribba)....Pages 85-111 A Further Look To Macroeconomic Outcomes of Fiscal Austerity in High Debt Countries (Antonella Cavallo, Pietro Dallari, Antonio Ribba)....Pages 113-131 Can (And Should) Germany Do It? Spillovers of German Fiscal Policies in the Euro Area (Antonella Cavallo, Pietro Dallari, Antonio Ribba)....Pages 133-152 The Labor Market Outcomes of Austerity. Evidence for Europe (Antonella Cavallo, Pietro Dallari, Antonio Ribba)....Pages 153-176 Back Matter ....Pages 177-178