The paper examines the steps taken in the EU countries during the 1990s to adjust the public finances, describing their main characteristics on the basis of the measures’ impact on expenditure and revenue. It also attempts to estimate the possible “non-Keynesian” effects of the budgetary measures adopted and of their composition on economic activity. These effects supposedly emerge via expectation regarding disposable income and/or via the competitiveness of the single economies. Alongside cases, including that of Italy, in which the traditional “Keynesian” effects appear to have dominated, there are cases in which deficit reduction has been accompanied by satisfactory macroeconomic results. The evidence does not refute the thesis that, in an appropriate economic policy context, suitably designed budgetary tightening can generate expansionary effects on private consumption and production.
Published in 1999 in: Studi e note di economia, 1, pp. 71-109
