1. Introduction

In this book we aim to measure fiscal policy in the Euro Area by using structural VAR (Vector Autoregression) and Panel VAR methodologies. In particular, we focus on a group of Euro-area countries affected by high public and/or high private debt. We show that the fiscal austerity has exerted significant recessionary effects in Greece, Italy and Portugal, i.e. high public debt countries but, instead, has had expansionary effects on aggregate output in high private debt economies like Ireland, the Netherlands and Spain. In this book we also motivate the importance for the Euro Area of a fiscal union for purposes of macroeconomic stabilization and, moreover, study spillovers from German fiscal expansions to the other Eurozone economies. We investigate the effects of fiscal shocks on a wide set of macroeconomic variables and also consider the labour market outcomes of fiscal austerity in a set of Euro-area Member States. In this introductory chapter we highlight the content of the book and briefly present and discuss the most relevant topics dealt with.