E-viri
Recenzirano
Odprti dostop
-
Fotiou, Alexandra
European economic review, November 2022, 2022-11-00, Letnik: 150Journal Article
This paper assesses how a country’s initial debt level affects the effectiveness of fiscal policy. Using a panel of 13 countries between 1980 and 2014, I find that when debt is high, fiscal consolidations based on tax increases are in general self-defeating, in that they result in an increase of the debt-to-GDP ratio. Instead, cutting public expenditure has a less pronounced effect on economic activity and can stabilize debt.
