| Summary: | In this dissertation empirical data are provided in order to find the impending effects
of fiscal consolidation shocks on fundamental macroeconomic aggregates across 29
OECD countries between 1990-2019. The main way of analysis is through the
classification of countries based on debt to GDP. Then the good and bad times are
studied and whether they negatively affect the fiscal stability, but also the high trade
openness of the countries. The empirical results suggest that countries with the
highest debt are the ones that have to deal with the adverse effects of fiscal
consolidation, on a number of factors such as trade, investment and the
unemployment rate. In addition, it is confirmed that the implementation of fiscal
consolidation strongly influences a period of fiscal recessions, in relation to the boom
periods. This is also reflected in output growth, where bad times make a country's
prospects difficult. Finally, low trade openness has a statistically significant effect on
the examined variables, while for countries with high trade openness, there are no
statistically significant data to confirm any impact.
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