Fiscal Consolidation and Economic Crisis – Ten Years After

In general, public finances are constantly exposed to many risks, shocks, stressors or pressure factors, demographic evolution, political turbulences, including economic and financial crises, depending on the stages of an economic cycle. On this background, we analyze the efforts of fiscal consolidation enacted in the EU Member States and their effects, using for judgments the concept of “smart fiscal consolidation†, aiming to identify the sources of success and failure in matter of governmental interventions. Our analysis relies on data from Eurostat database for the 28 Member States of the European Union, covering a decade timescale, from 2008 to 2017. The main findings suggest that the composition of fiscal adjustment measures, timing, burden or sacrifice distribution over society and the harmonization of structural reforms represent the most important determinants of the success of fiscal consolidation episodes. Based on our findings, we identify and formulate some successful recipes, which could be useful for policy makers in the context of other economic turbulences.