Eurozone Stimulus: A Myth, Some Facts, and Estimates

Publication: Policy Letter No. 2, 2009
Topic Area: Macro Finance
Authors: Volker Wieland
Date: Sep 2009
Keywords: fiscal stimulus packages
Abstract:

Eurozone governments have engaged in substantial fiscal stimulus. This column argues against further fiscal measures, claiming that forward-looking firms and households will cut their expenditure in response to governmental expansions. It warns that further fiscal efforts risk eroding financial and monetary policies that are combating the crisis.

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