Almeida, Vanda; Castro, Gabriela Lopes de; Félix, … - Banco de Portugal - 2011
This article focuses on the costs and benefits of a fiscal consolidation in a small euro area economy. The …. We define a benchmark fiscal consolidation strategy based on a permanent reduction in Government expenditure. We find … that, over the long run, fiscal consolidation leads to a considerable increase in the level of output and consumption, and …