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May Austerity be Counterproductive?

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García Sánchez, Pablo (2013) May Austerity be Counterproductive? [Trabajo fin de Grado]

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URL Oficial: http://eprints.ucm.es/25804/




Resumen

This paper investigates the impact that fiscal policy has on economic activity and sovereign debt during economic downturns in the euro area, mainly Germany and Spain. Our theoretical and empirical framework shows that the
feasibility of austerity measures depends crucially on the values of the fiscal multipliers. We find that, for the Spanish economy, even if policy makers just focus on the public debt ratio, ignoring output and unemployment, policies of deficit reduction are self-defeating. In fact, counter cyclical policies beat deficit consolidation policies in driving the sovereign debt ratio to a more sustainable path, no matter if shocks are on aggregate supply or aggregate demand. By contrast, in the German case, we cannot reject the hypothesis that austerity
may be the proper alternative in a sluggish economy.


Tipo de documento:Trabajo fin de Grado
Directores (o tutores):
NombreEmail del director (o tutor)
Sebastián Gascón, Miguel
Palabras clave:Fiscal policy; Economic activity; Euro area.
Materias:Ciencias Sociales > Unión Europea > Unión económica y monetaria europea
Ciencias Sociales > Economía > Indicadores económicos
Título de Grado:Grado en Economía
Código ID:25804
Depositado:02 Jul 2014 08:12
Última Modificación:26 May 2015 12:14

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