Cutting current expenditures boosts growth more than tax increases in EMU countries.
The article examines how fiscal policies in European countries affect economic growth. By analyzing data from 1980 to 2015, the researchers found that cutting current expenditures boosts growth, while reducing investment spending can lower GDP growth. During times of fiscal stimulus, tax cuts and public investments tend to increase economic growth more than current public spending. These findings are specific to European countries in the Economic and Monetary Union and may not apply to other nations due to differences in government size and market institutions.