Fiscal Consolidation, Shadow Economy and the Sustainability of Private Consumption: Further Evidence from Selected Eurozone Economies

• • 
  • Presentation speakers
    • Ioannis Kostakis, Harokopio University, Athens
    • Eleni Theodoropoulou, Harokopio University, Athens

  Abstract:

  According to neoclassical perception the growth of private consumption is higher during (or after) fiscal consolidation periods via the multiplier effect of a government cut. Private consumption booms, therefore are more likely to be associated with large cuts in deficits by either increasing taxes or by reducing transfers. On the other hand, shadow economy and corruption issues have only lately gained economic researchers’ interest showing a negative effect on real economy. This research uses an alternative growth of private consumption approach using dynamic panel data regression analysis of 17 (14 excluding Estonia, Latvia and Lithuania) Eurozone countries and endeavors to shed light on these issues. Empirical findings show that consolidation periods experience a marginal lower private consumption growth, questioning the generality of neoclassical theory implication. Furthermore, as expected, informal economy leads to a higher private consumption, but with a high cost for public economics

 

Related Presentations

 

What Kind of Role Should the European Union Play for Achieving Sustainable Peace in Georgia? : Improving the Effectiveness of the European Union Monitoring Mission in Georgia (EUMM)

• Shu Uchida

Diplomatic Instruments: U.S. Symphony Orchestras And The Cold War

• Jonathan Rosenberg

The EU’s Changing Discourse in the EU Documents on Civil Society in Turkey

• Alper Yurttas
• Selma Sekercioglu

American Internationalism and Cultural Diplomacy: The Rise and Decline of an idea in the Twentieth Century

• Jon Davidann

Bologna’s Iconography. The Representation of the City in the Paintings of Pinacoteca Nazionale

• Denise Tamborrino

Media Analyses of Political Crisis and the Enlargement Policy of the European Union: Impact on European Integration Processes in Macedonia

• Liljana Siljanovska