Fiscal tightening and economic growth

For every sample period, three estimation approaches are used – ordinary least squares, ordinary least squares excluding Greece from the sample, and robust regressions. The estimated coefficient on the change in the cyclically adjusted primary balance ranges between -0.7 and -1.4, and is statistically significant in 8 of the 12 estimated regressions. When Greece is excluded, the coefficient ranges between -0.7 and -0.8. Trading partner growth interaction with the exports share is positive and significant in 9 out of 12 specifications. Pre-crisis growth is positively connected with growth and significantly so in two of the specifications. Real interest levels display the expected negative sign but also for the most part aren’t statistically significant. The change in the true effective exchange rate isn’t significantly linked to growth in these estimations.