We analyze the non-linear effects of government spending for the Euro area in recession, by using local projection method and by testing whether the impact of the shock depends crucially on the levels of public debt or the depth of the recession. We provide three insights. First, expenditure...

During the sovereign debt crisis, many Euro countries have deployed "austerity packages" implementing structural reforms and cutting government spending. Such policies should have led to an initial decline in GDP followed by recovery and a reduction of the debt to gdp ratio. Key to this outcome...

There is now a wide agreement that reforms of the architecture of the Eurozone (EZ) are needed, reforms aimed at fostering further integration of economic policy and governance. Behind the plea for "more Europe", divergences loom large across member states. The cleavage is normally represented...