The Impact of the EU Fiscal Framework on Economic Activity: A Quantitative Assessment

22 Pages Posted: 17 Apr 2012

See all articles by Alessandro Turrini

Alessandro Turrini

European Commission; Centre for Economic Policy Research (CEPR)

Jan in 't Veld

European Union - Directorate General for Economic and Financial Affairs (DG ECFIN)

Date Written: April 1, 2004

Abstract

The paper by Turrini and in’t Veld focuses on the impact of the European fiscal rules on economic activity. Their investigation concerns euro-area countries and it is split into two steps. First, they provide an estimate of the fiscal outcomes that would have prevailed in the absence of the European fiscal framework. Without fiscal rules, euro-area countries would have ended up with higher primary deficits and higher debt. Secondly, these counterfactual public finances outturns are plugged into the European Commission’s econometric model to assess their effects on macroeconomic variables. The authors find that, especially when the effects of worsening in public finance variables on risk premia are taken into account, the positive GDP effects are short-lived.

Suggested Citation

Turrini, Alessandro and in 't Veld, Jan, The Impact of the EU Fiscal Framework on Economic Activity: A Quantitative Assessment (April 1, 2004). Available at SSRN: https://ssrn.com/abstract=2040787 or http://dx.doi.org/10.2139/ssrn.2040787

Alessandro Turrini (Contact Author)

European Commission ( email )

Office BU-10/113
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Centre for Economic Policy Research (CEPR)

London
United Kingdom

Jan In 't Veld

European Union - Directorate General for Economic and Financial Affairs (DG ECFIN) ( email )

CHAR 14/245
Brussels, Bruxelles B-1049
Belgium
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(32 2) 2957 499 (Fax)

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