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  3. American Economic Review
  4. May 2012
  5. Fiscal Policy and the Great Recession in the Euro Area

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Fiscal Policy and the Great Recession in the Euro Area

  • Günter Coenen
  • Roland Straub
  • Mathias Trabandt
American Economic Review
vol. 102, no. 3, May 2012
(pp. 71–76)
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Abstract

How much did fiscal policy contribute to euro area real GDP growth during the Great Recession? We estimate that discretionary fiscal measures have increased annualized quarterly real GDP growth during the crisis by up to 1.6 percentage points. We obtain our result by using an extended version of the European Central Bank's New Area-Wide Model with a rich specification of the fiscal sector. A detailed modeling of the fiscal sector and the incorporation of as many as eight fiscal time series appear pivotal for our result.

Citation

Coenen, Günter, Roland Straub, and Mathias Trabandt. 2012. "Fiscal Policy and the Great Recession in the Euro Area." American Economic Review, 102 (3): 71–76. DOI: 10.1257/aer.102.3.71

JEL Classification

  • E32 Business Fluctuations; Cycles
  • E62 Fiscal Policy
  • F36 Financial Aspects of Economic Integration
  • G01 Financial Crises