Following the onset of economic crisis in 2009, the Slovenian government started officially adopting austerity policies, mostly in 2012. In this paper, the authors discuss the role and impact of austerity policies on positive macroeconomic developments during the last three years and address the question of whether austerity policies were indeed systematically enacted. They identify those policy measures that have been the key drivers of achieved positive macroeconomic results. The discussion presented in this paper builds on the arguments and conclusions we presented in 2014 (Effectiveness of austerity measures and the role of Keynesian demand management: Slovenia. Seventy-Seventh International Atlantic Economic Conference. Madrid: International Atlantic Economic Society, 2014).
The authors investigate the impact of austerity policies by empirically analysing the crowding out effect, the Ricardian equivalence principle and the domestic competitiveness effect on economic growth. They look into determinants of economic growth and the impact of fiscal policies on the relationship between the costs of increasing state debt and economic growth. The authors show that Slovenia has executed austerity measures only over short time periods and argue that negative impacts on economic growth and budget deficits were achieved by exercising austerity. The authors show that the revival of economic growth was autonomous and thus independent of enacted economic policies. Such economic growth has also benefited the general budget balance and fiscal position of Slovenia.