IDEAS home Printed from
   My bibliography  Save this paper

Discretionary fiscal policy in the Euro area: past, present, future


  • Francesco Caprioli

    () (Bank of Italy)

  • Marzia Romanelli

    () (Bank of Italy)

  • Pietro Tommasino

    () (Bank of Italy)


The depth and the length of the recent crisis prompted a more positive re-assessment of a countercyclical fiscal stance, especially in the euro area. Against this background, we look at discretionary fiscal policy in the euro area from three different perspectives. First, we provide evidence that the discretionary fiscal policy in euro-area countries has been mostly a-cyclical even if our estimates suggest that using it counter-cyclically could have been useful, particularly during the crisis. Second, focusing on the short-run – i.e. taking as given the economic and institutional constraints that currently make a significant fiscal expansion quite unrealistic in Europe – we discuss some budget-neutral proposals aimed at fostering economic growth. Finally, taking a more forward-looking perspective, we discuss the issue of the appropriate fiscal stance for the euro area as a whole, and argue that the advantages of having a coordinated approach (e.g. through a centralized fiscal capacity) can be substantial.

Suggested Citation

  • Francesco Caprioli & Marzia Romanelli & Pietro Tommasino, 2017. "Discretionary fiscal policy in the Euro area: past, present, future," Questioni di Economia e Finanza (Occasional Papers) 398, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_398_17

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Alan J. Auerbach & Yuriy Gorodnichenko, 2012. "Measuring the Output Responses to Fiscal Policy," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 1-27, May.
    2. Alan J. Auerbach & Yuriy Gorodnichenko, 2013. "Output Spillovers from Fiscal Policy," American Economic Review, American Economic Association, vol. 103(3), pages 141-146, May.
    3. Donatella Baiardi & Paola Profeta & Riccardo Puglisi & Simona Scabrosetti, 2019. "Tax policy and economic growth: does it really matter?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(2), pages 282-316, April.
    4. Attinasi, Maria-Grazia & Prammer, Doris & Stähler, Nikolai & Tasso, Martino & Van Parys, Stefan, 2016. "Budget-neutral labour tax wedge reductions: A simulation-based analysis for selected euro area countries," Discussion Papers 26/2016, Deutsche Bundesbank.
    5. Donatella Baiardi & Paola Profeta & Riccardo Puglisi & Simona Scabrosetti, 2017. "Tax Policy and Economic Growth: Does It Really Matter?," CESifo Working Paper Series 6343, CESifo Group Munich.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Marco Committeri & Pietro Tommasino, 2018. "Managing sovereign debt restructurings in the euro zone. A note on old and current debates," Questioni di Economia e Finanza (Occasional Papers) 451, Bank of Italy, Economic Research and International Relations Area.
    2. R. Golinelli & I. Mammi & A. Musolesi, 2018. "Parameter heterogeneity, persistence and cross-sectional dependence: new insights on fiscal policy reaction functions for the Euro area," Working Papers wp1120, Dipartimento Scienze Economiche, Universita' di Bologna.
    3. Cláudia Braz & Nicolas Carnot, 2019. "Euro area fiscal policy changes: stylised features of the past two decades," Working Papers w201910, Banco de Portugal, Economics and Research Department.

    More about this item


    discretionary fiscal policy; automatic stabilizers; European Monetary Union;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bdi:opques:qef_398_17. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.