The austerity debate hangs on the question of how fiscal policy affects economic output – but answering that question is no easy task. This column presents a paper that, it argues, overcomes some of the problems with identifying cause and effect.

Many OECD countries suffer from high sovereign debts. Sooner or later, this problem must be addressed. Many argue that this will require some form of fiscal retrenchment or institutional reform or a combination of the two. This column argues that the two are not complements as many suggest – they are instead substitutes.

The French and Greek elections, together with a softer than expected Eurozone macroeconomy, are forcing a rethink of the austerity-only solutions embraced by political leaders across Europe. This column introduces an ‘eCollection’ that brings together analysis by a dozen leading thinkers on austerity. The book also launches ‘eCollection’ , a new VoxEU.org vehicle for disseminating research-based policy analysis by the world’s top economists.

The deadliest aspect of the Eurozone crisis is the tripwire linking the riskiness of banks and governments. This column provides evidence of the link and explains how it arose. It argues that given the near-chaos-like interaction, the zero risk weights on sovereign bonds should be revisited.

Several Eurozone countries are currently struggling with acute fiscal crises. This column argues that Sweden provides an example that fiscal transparency and a high-quality economic policy debate may be more important for budget discipline than formally binding rules and automatic correction mechanisms as being envisaged in the European fiscal compact.

Spreads on public debts in the Eurozone – with the exception of Greece – are falling hard and fast. This column argues that this is in large part because the ECB is now effectively guaranteeing Eurozone government debts. But it cautions that in doing so, the central bank is taking enormous risks.

How do countries get into debt? And how does this debt rise so fast? The short answer may be obvious, but this column shows that the longer answer certainly isn’t.

As fears mount of another phase in the global crisis, this column points out that despite the growing uncertainty, US Treasury and German Bund yields have actually declined in recent weeks. The reason, it argues, is the global saving glut theory.

The fiscal crises faced by countries in southern Europe have led many commentators to group them together in their analysis. This column argues that the causes of these overvalued currencies and twin deficits are different. For Greece and Portugal the problem is insolvency; for Ireland and Spain, illiquidity. Italy has a higher savings rate and its foreign imbalances are much smaller.