We simulate the macroeconomic and welfare implications of different fiscal consolidation scenarios in Italy using a medium scale two-areas dynamic general equilibrium currency-union model. Differently from similar models, ours is rich in the terms of fiscal features. We assume distortionary...

This paper investigates the relationship between fiscal contractions, permanent improvements in public finances and short-run economic performance. The empirical evidence gathered from the European experience over the last three decades shows clearly that the composition of fiscal adjustments...