The Costs of Greece"s Fiscal Consolidation

Abstract

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Which Fiscal Multipliers Are Regime‐dependent? A Meta‐regression Analysis

“…Furthermore, our paper is related to Gechert et al . () and Gechert and Rannenberg () in that they employ the multiplier estimates from an earlier working paper version of this paper in order to assess the effects of the Euro Area and Greek fiscal consolidations over the 2011–2013 and 2010–2014 periods, respectively. Gechert et al .…”

“…Gechert et al . () and Gechert and Rannenberg () find that the spending cuts included in these consolidations were badly timed because they were implemented during a downturn, implying that their adverse gross domestic product (GDP) effects were high. They therefore contributed little to lowering the deficit.…”

Myths, Mix-ups, and Mishandlings: Understanding the Eurozone Crisis

“…If we assume the fiscal multiplier to equal 1.8, then the fiscal consolidation of 9 percentage points of GDP undertaken by Greece must have reduced Greek GDP by more than 16 percent-which, in turn, would have raised the public debt-GDP ratio by about 24 percentage points if we assume public debt to be constant. Thus, austerity explains almost the entire collapse of Greek GDP after 2009 (see Gechert and Rannenberg 2015). Such contractionary outcomes are typical of fiscal austerity, as shown by Ball et al (2013) who looked at 173 episodes of fiscal austerity in the OECD economies over the past thirty years.…”

The History of the European Monetary Union

“…German Confederation States were added with English, Danish, French and Russian ones 31 � Therefore, the metallic circulation was variegated� It prevailed the silver standard, but the weights and names of the coins were different and there were two units of reference adopted by a certain number of States: the thaler in the Northern States -including Prussia -, the florin in the Southern States -including Austria� Even within the two bench marks prevailed chaos: denominations or number of pieces which could be minted with the unit of weight of the referent fine metal fluctuated 32 � This system created many difficulties for the process of industrialization that Germany was facing at that time, a process already hampered by the division of the country into many state entities� In particular, the Prussian territories as agreed by the Treaty of Vienna sprawled across Northern Germany, but their economic development was hampered by antiquarian tariff barriers� Within Prussia there were sixty-seven different tariffs and thirteen non-Prussian enclaves, each with a different fiscal system� Internal customs duties in Prussia were abolished in 1818: the customs union, the Zollverein, was born� One of the enclaves was induced by the Prussian Finance Minister, Friedrich von Motz, to hand over its customs administration in 1819; six other small States followed suit in 1822� Other German States, perceiving the economic strength that was accruing to Prussia, formed unions of their owns in 1828, but, as the resources of the Prussian union were greater, they too were forced into the Zollverein by the end of 1833� More States joined in following eleven years, although the great seaports such as Hamburg and Bremen were strong enough to remain outside�…”

“…The problem of free movement of goods had already placed after the birth of the Confederation, in the wake of the ideas of the economist Friedrich List 33 , who was calling for the overthrow of the complex grid 31 In the first half of the nineteenth century, a shortage of banknotes, which made up only 3% of the money circulating in Germany, was opposing to this variety of metallic money� Cf� De Simone, Ennio, Storia della banca: dalle origini ai nostri giorni, Napoli, Arte Tipografica, 1987, p� 175� 32 Cf� Schor, op. cit., p� 20� 33 Born in Reutlingen (Württemberg) in 1789, List taught at the University of Tübingen, a position he had to leave in 1818 because frowned upon by the government for its economic doctrines� In fact, he advocated the need to break down trade barriers among German States and abolish the doctrine of free trade in relations with foreign countries, saying that Germany could give rise to a domestic industry only through protectionism; once the industry had grown sufficiently to cope with international competition it could return to free trade� Cf� Fauri, op.…”