Low Interest Rate Environment Amplifies Negative Effects of Austerity Policy

Mathias Klein

No 1, DIW focus from DIW Berlin, German Institute for Economic Research

Abstract: Large-scale fiscal consolidations and the implementation of structural reforms should help southern European countries resolve the crisis. But recent studies indicate that in conjunction with the low interest rate in the euro area, the austerity measures that has been imposed could have the opposite effect, leading to an increase in sovereign debt and economic slowdown. For this reason, a more balanced policy mix consisting of less restrictive spending measures and more investment incentives is preferable to an austere savings policy.

Pages: 6 p.
Date: 2018
New Economics Papers: this item is included in nep-eec
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.diw.de/documents/publikationen/73/diw_01.c.575701.de/diw_focus_1.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:diw:diwfoc:1en

Access Statistics for this paper

More papers in DIW focus from DIW Berlin, German Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Bibliothek ().