Seminar
Austerity and Productivity: Evidence from Euro Area Regions
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Series
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Speaker
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LocationErasmus University Rotterdam, E building, Kitchen/Lounge E1
Rotterdam -
Date and time
November 09, 2023
12:00 - 13:00
Abstract
In
this paper, we investigate the link between fiscal consolidations,
productivity, and economic growth in the Euro Area. First, we provide
novel empirical evidence on the negative impact of fiscal austerity on
productivity using granular data from Euro Area regions. Second, we
demonstrate that an open-economy New Keynesian model extended by
Schumpeterian endogenous growth can reproduce our empirical findings.
Finally, we test a central model prediction in the data: how the varying
degree of innovation efficacy determines the regional differences in
productivity and real effects of fiscal consolidations. Joint paper with Ricardo Duque Gabriel, Mathias Klein, and Ana Sofia Pessoa.