The Macroeconomic Impact of the Fiscal Compact 2012 to 2016 – Results of Simulations with the Oxford Model

Simulations carried out with the global econometric model of "Oxford Economics" clearly show the following: Stabilising long-term interest rates in all euro countries at a level below the rate of economic growth would strongly and sustainably improve the performance of the respective economies. The opposite would be the case if all countries continue to follow a restrictive course according to the rules of the fiscal compact. Hence, also the fiscal stance would improve much more under the conditions of stable interest rates as compared to continuing with austerity policy.