Why Austerity Can Be Self-Defeating for Member States of a Currency Union

Intereconomics - Review of European Economic Policy

8 Pages Posted: 11 May 2017

Multiple version iconThere are 2 versions of this paper

Date Written: January 15, 2012

Abstract

Despite all efforts to reduce government budget deficits, debt-to-GDP ratios of crisis-hit member states of the European Monetary Union are still growing faster than expected. At the same time GDP growth performance is poor and according to most forecasts expected to worsen. In this paper I show that this is the likely outcome of austerity policy in member states of a currency union with overindebted private sectors.

Keywords: Fiscal Policy, Austerity Debate, Currency Union

JEL Classification: E62

Suggested Citation

Maurer, Rainer, Why Austerity Can Be Self-Defeating for Member States of a Currency Union (January 15, 2012). Intereconomics - Review of European Economic Policy, Available at SSRN: https://ssrn.com/abstract=2966869

Rainer Maurer (Contact Author)

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