UTAK’s Chief Economist Otto Kyyrönen published a working paper in the Institute for International Political Economy Berlin’s series. You can access the publication here. Kyyrönen critically examines the DSA calculations underpinning the debt brake and assesses the fiscal rule’s potential macroeconomic effects on the Finnish economy over the period 2028–39. The analysis is based on macroeconomic simulations created with the European Commission’s DSA model. The paper contributes to a growing literature showing that fiscal consolidation implemented under conditions of weak economic growth, especially when based primarily on spending cuts, may produce substantially weaker macroeconomic outcomes than anticipated and may even increase the public debt ratio.
