It’s an important question in a European Parliament election year – especially one where many seem to be planning on punishing the EU for the perceived failures of its leadership and conception during the Eurocrisis (even though, y’know, the European Parliament has had little to no involvement in setting policy in this area) – and most people seem to think they know the answer, and that it is along fhe lines of “extremely negatively”.

In reality? This is all quite confusing and rather more complex.

Still, this from Menzie Chinn of the University of Wisconsin (and former adviser to President Bush Jr) is worth a look as an introduction to some of the latest thinking (even if I can’t pretend to have understood it all…) – Euro and Non-Euro Countries and Fiscal Policy

Most interesting are the handy comparative charts – one including Eurozone countries, one excluding them. Though these are not as easy to interpret as they may appear ar first glance, because “clearly, other factors than fiscal policy can affect output” – something many commentators and politicians have seemed to forget over the last few years in their drives for easy answers that appeal to their core audience.

(Apologies for linking to something that contains the phrase “highly endogenous to the change in the numerator” this early in the morning…)