This paper studies the negative loop caused by the interaction between pessimistic estimates of potential output and the effects of fiscal policy in Europe during 2008–2014. We argue that policymakers’ reliance on overly pessimistic views of potential output led to a large adjustment in fiscal policy. Contractionary fiscal policy, via hysteresis effects, caused a reduction in potential output that in part validated the original pessimistic forecasts and led to a second round of fiscal consolidation. The paper concludes by discussing alternative frameworks for fiscal policy that could avoid this negative loop in future crises.

中文翻译：

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财政政策，潜在产出和不断变化的目标

本文研究了由潜在产出的悲观估计与2008-2014年欧洲财政政策影响之间的相互作用所引起的负循环。我们认为，决策者对潜在产出过于悲观的看法导致了财政政策的重大调整。收缩性财政政策通过滞后效应导致潜在产出减少，这在一定程度上验证了最初的悲观预测，并导致了第二轮财政整顿。本文最后讨论了可以避免在未来危机中避免这种负面循环的财政政策替代框架。