Universidad Carlos III de Madrid - UC3M
Fiscal imbalances and output crises in Europe: will the fiscal compact help or hinder?
Graham Birdab* & Alex Mandilarasb pages 1-16 Journal of Economic Policy Reform Volume 16, Issue 1, 2013. Published online: 30 Jan 2013
Lunes 19 de mayo de 2014, por Carlos San Juan
The eurozone crisis has involved sharp output declines and has generated much discussion about the appropriate design of macroeconomic policy both in terms of dealing with the contemporary situation and minimising the risks of future crises. Much of the debate surrounding the crisis has focused on fiscal policy. All but two member states of the European Union have signed a draft treaty, the ‘fiscal compact’, that seeks to eliminate structural fiscal deficits. This paper examines the relationship between fiscal balances and output shortfalls amongst the eurozone countries allowing for other factors. In the light of the findings it critically assesses the fiscal compact.