Options for the Consolidation of Public Budgets in Austria

Karl Aiginger, Hans Pitlik and Margit Schratzenstaller-Altzinger

Austrian Economic Quarterly, 2010, vol. 15, issue 2, 184-197

Abstract: The Austrian Federal Government has set itself the goal to reduce the Maastricht deficit to 2.7 percent of the GDP by 2013. In the medium term, a consolidation of the public budgets will be necessary to regain room for manoeuvre for budget policy and to avoid undesirable distributive effects of the public debt. In the short term, the budget consolidation process may not leave the business cycle and the labour market unaffected; in the long term, the benefits following regained fiscal scope will also further growth and employment. One prerequisite for a successful budget consolidation strategy that will not dampen growth and employment in the long term is the accompanying implementation of an "Active Component" ("Aktivkomponente"), i.e., the priority of expenditure promoting growth. Furthermore, measures to support private consumption and investment should be taken. An "Impulsprogramm 2010" should be implemented prior to any budget consolidation measures.

Keywords: Budget; Consolidation (search for similar items in EconPapers)
Date: 2010
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