Present research aims at the introduction of the term “Fiscal Trap” in economic literature, as a comprehensive definition of the economic situation in which any available combination of fiscal-only policy measures (tax increases and austerity measures), would fail to fulfill fiscal targets during periods of recession. Using recent experience from the case of Greece, an ex-post evaluation of adopted policy effectiveness is pursued. Fiscal austerity and increased taxation enforced in Greece during the years 2009-2012, resulted in decreased tax revenues, lower GDP and increased debt-to-GDP ratio. In order to slip away from the vicious cycle generated by austerity and tax hikes, policymakers might need the help of an appropriate monetary stimulus.
"“Fiscal Trap”, the case of Greece,"
Southern University College of Business E-Journal: Vol. 8:
1, Article 1.
Available at: https://digitalcommons.subr.edu/cbej/vol8/iss1/1
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