Does austerity work? The changes for improved EU economic governance

  1. Javier Bilbao Ubillos 1
  1. 1 Universidad del País Vasco/Euskal Herriko Unibertsitatea
    info

    Universidad del País Vasco/Euskal Herriko Unibertsitatea

    Lejona, España

    ROR https://ror.org/000xsnr85

Journal:
Interciencia: Journal of Science and Technology of the Americas

ISSN: 0378-1844

Year of publication: 2018

Volume: 43

Issue: 8

Pages: 75-106

Type: Article

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More publications in: Interciencia: Journal of Science and Technology of the Americas

Abstract

This article analyses the architecture of economic governance designed in the EMU prior to the crisis and the new elements introduced into the framework of economic intervention while facing the crisis. After comparing the Economic policy for official and alternative exit strategies, we use econometric regression to show the clear correlation between the intensity of austerity plans (estimated by the changes in the structural balance introduced by discretional fiscal policy since 2009) and the trend in output in euro area countries. This article concludes asserting that the architecture of economic governance in the EU has demonstrated serious failings in its ideological and institutional aspects and that more and bolder policy action is needed.