Budgetary policy in the countries of the European Union in the 1990s

Paola Caselli () and Roberto Rinaldi ()
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Paola Caselli: Banca d'Italia
Roberto Rinaldi: Banca d'Italia

No 334, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: The paper examines the steps taken in the EU countries during the 1990s to adjust the public finances, describing their main characteristics on the basis of the measures’ impact on expenditure and revenue. It also attempts to estimate the possible “non-Keynesian” effects of the budgetary measures adopted and of their composition on economic activity. These effects supposedly emerge via expectation regarding disposable income and/or via the competitiveness of the single economies. Alongside cases, including that of Italy, in which the traditional “Keynesian” effects appear to have dominated, there are cases in which deficit reduction has been accompanied by satisfactory macroeconomic results. The evidence does not refute the thesis that, in an appropriate economic policy context, suitably designed budgetary tightening can generate expansionary effects on private consumption and production.

Keywords: budgetary policy; European Union (search for similar items in EconPapers)
Date: 1998-07
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_334_98

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