The Report on the State of the European Union examines the progress of European integration and focuses on economic aspects of the process. This third volume in the series explores the EU in light of the current crisis

EMU countries have engaged in a consolidation of fiscal policies since 2011. This paper deals with the public debt and output dynamic consequences of this strategy. To this end, we develop a simple macroeconomic model of the Euro area, where fiscal multiplier is time-varying. Recent empirical...