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Fiscal stability and dynamics in the Eurozone

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  • Norén, Ronny

Abstract

The long-term balance between fiscal efforts of stabilisation and necessary growth to obtain full capacity is the issue must be the focus of the discussion of economic policy by the countries in the Eurozone. Labour market reforms to create flexibility is important, and necessary, but not sufficient. To make labour market reforms feasible they must also be supported by short run measures to create flexibility in economic policy to stabilize demand on a steady state growth path. By the help of an elementary economic transformation model, it is possible to show that fiscal efforts of stabilisation in the Eurozone can be a threat against economic transformation itself, and hence, growth.

Suggested Citation

  • Norén, Ronny, 2009. "Fiscal stability and dynamics in the Eurozone," Journal of Policy Modeling, Elsevier, vol. 31(1), pages 51-57.
    • Handle: RePEc:eee:jpolmo:v:31:y:2009:i:1:p:51-57
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    References listed on IDEAS

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    1. Torres,Francisco & Giavazzi,Francesco (ed.), 1993. "Adjustment and Growth in the European Monetary Union," Cambridge Books, Cambridge University Press, number 9780521440196.
    2. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
    3. Katinka Barysch & Charles Grant & Mark Leonard, 2005. "Embracing the dragon: can the EU and China be friends?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 6(03), pages 08-15, October.
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    Cited by:

    1. Onorante, Luca & Pedregal, Diego J. & Pérez, Javier J. & Signorini, Sara, 2010. "The usefulness of infra-annual government cash budgetary data for fiscal forecasting in the euro area," Journal of Policy Modeling, Elsevier, vol. 32(1), pages 98-119, January.
    2. KORKMAZ, Özge, 2017. "Is Minsky’S Instability Hypothesis Acceptable For The Relation Between Borrowing Rate And Profitability?," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 21(1), pages 6-27.
    3. Maravalle, Alessandro & Claeys, Peter, 2012. "Boom–bust cycles and procyclical fiscal policy in a small open economy," Journal of Policy Modeling, Elsevier, vol. 34(5), pages 735-754.

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