The Macroeconomics of Austerity in the European Union

Semmler, Willi

doi:10.1353/sor.2013.0061

Cited by 9 publications

(2 citation statements)

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“…Incentives for personal 12. As is now widely accepted, the imposition of austerity in the eurozone in the post-2008 period provides an important example of this mechanism (Semmler 2013). 13.…”

Section: An Updated Progressive Macro Policy Programmementioning

confidence: 99%

Macroeconomic policy at the end of the age of abundance

Michell

2023

European Journal of Economics and Economic Policies Intervention

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Progressive policy proposals influenced by post-Keynesian economics emphasise the use of fiscal policy and income redistribution to maintain aggregate demand at levels which achieve full employment. Given persistent evidence of weak demand, excess capacity and unemployment in rich economies since around 1980, expansion of demand would have been appropriate over much of this period. Tighter supply constraints – both short-run constraints due to disruption caused by climate change and geopolitical tensions, and longer-run constraints due to absolute carbon budgets – impose additional challenges in designing policy. In order to increase investment sufficiently to achieve net zero goals, constraints on consumption may be required. Such constraints would weaken the multiplier mechanisms emphasised by post-Keynesian analysis, implying lower growth and higher public debt stocks. Traditional progressive policy proposals will need updating to reflect these constraints. New institutional arrangements will be required to implement updated policy packages.

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Section: An Updated Progressive Macro Policy Programmementioning

confidence: 99%

Macroeconomic policy at the end of the age of abundance

Michell

2023

European Journal of Economics and Economic Policies Intervention

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“…The role of financial accelerator effects à la Bernanke et al (1999) and associated rising capital costs for firms in austere countries has been emphasized in the literature (see e.g. Semmler, 2013;. A simple extension to the baseline model to include capital and a financial accelerator mechanism might then rationalize that export (and other output) prices did not fall in austere countries despite the fall in wages.…”

Section: Missing Terms Of Trade Responsementioning

confidence: 99%

Does Austerity Go Along with Internal Devaluations?

Lambertini

Proebsting

2019

IMF Econ Rev

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Cuts to government spending rather than increases in consumption taxes are statistically associated with internal devaluations in the euro area during the period 2010-2014. Countries that cut spending experienced a decline in nominal wages, rising net exports, a fall in the relative price of non-tradables and a shift of consumption towards nontradables. We show that these patterns are generally consistent with a neoclassical small open economy model with GHH preferences. The main remaining discrepancy between model and data is a missing terms of trade response in the data: Export prices did not decline in austere countries (nor did import prices), giving rise to asymmetric expenditure switching: Current account improvements are solely driven by falls in imports rather than increasing exports.

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Value at Looking Back

Puaschunder

2020

Behavioral Economics and Finance Leadership

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The Macroeconomics of Austerity in the European Union

Cited by 9 publications

References 50 publications

Macroeconomic policy at the end of the age of abundance

Macroeconomic policy at the end of the age of abundance

Does Austerity Go Along with Internal Devaluations?

Value at Looking Back

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