This paper aims at explaining what drove the adoption of austerity policies over the period 2010-16 in a panel of 28 European countries. Austerity is identified by year increases in the ratio between the structural primary balance and potential GDP. By means of principal component factor...

‘Austerity' was the 2010 word of the year according to the Merriam-Webster Dictionary, with more that 250,000 clicks on the online edition. This papers examines fiscal austerity in the specific context of the 12 early members of the European Economic and Monetary Union and, for comparative...