Fiscal multiplier, automatic stabilizers and public debt A simulation exercise for Greece
Fiscal multiplier, automatic stabilizers and public debt A simulation exercise for Greece
Greece Focus Notes
12 Μαΐου 2014
While a vast volume of theoretical and empirical work exists on the effects of fiscal policy on economic activity, the feedback effect from growth to fiscal aggregates, and in particular to government debt, has received less attention. This issue is becoming increasingly important in this juncture, as debt reduction has become a key policy target in a number of advanced economies. In the case of Greece, an aggressive fiscal consolidation effort has been undertaken since the outbreak of the sovereign debt crisis and the subsequent signing of the first and the second (present) economic adjustment program.
