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Small fiscal multipliers do not justify austerity: a macroeconomic accounting analysis of public debt-to-gdp dynamics

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  • Garbellini, Nadia

Abstract

In the aftermath of a crisis which has now been lasting for more than five years, the debate about the size of fiscal multipliers arouse. Whatever the estimation approach, fiscal multipliers assumed for projections are the result of extrapolations from time series data. The present contribution aims at taking a different perspective, by answering the following question: is it really necessary to know the value of fiscal multipliers to take sensible policy decisions?

Suggested Citation

  • Garbellini, Nadia, 2014. "Small fiscal multipliers do not justify austerity: a macroeconomic accounting analysis of public debt-to-gdp dynamics," MPRA Paper 62231, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:62231
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    References listed on IDEAS

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    5. Katia Berti & Francisco de Castro & Matteo Salto, 2013. "Effects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics in EU Member States," European Economy - Economic Papers 2008 - 2015 504, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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    7. Jocelyn Boussard & Francisco de Castro & Matteo Salto, 2012. "Fiscal Multipliers and Public Debt Dynamics in Consolidations," European Economy - Economic Papers 2008 - 2015 460, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    8. Olivier Blanchard & Roberto Perotti, 2002. "An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1329-1368.
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    Cited by:

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    2. Orsola Costantini, 2015. "The Cyclically Adjusted Budget: History and Exegesis of a Fateful Estimate," Working Papers Series 24, Institute for New Economic Thinking.

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    More about this item

    Keywords

    Fiscal multipliers; Debt-to-gdp ratio; Consolidation programmes; Eurozone Crisis.;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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