Fiscal Issues in Financial Crisis
Fiscal constraint is potentially lax in catching-up economies, but it has not been abused by most countries considered in this paper. Fiscal risks are significant currently, but sustainability and structural balances are not threatened as a rule, if the return to potential growth rates is to be achieved in the medium run. The risks to countercyclical public financing could be discouraged by a comprehensive EU stabilization policy of some sort. Early euro adoption, absent credible stabilization policy, is not the first best policy option for fiscal policy targets.
|Length:||31 pages including 11 Figures|
|Date of creation:||Sep 2011|
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|Publication status:||Published as wiiw Research Report|
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