Euro zone: Everything is aligned in the economy and the theoretical literature for a large fiscal stimulus in 2020

Growth in the euro zone may slow sharply in 2020 under the effect of: Rising oil prices; A no-deal Brexit; The negative industrial cycle; Rising household savings rates in some countries. If all these negative mechanisms arise, growth will be very weak in the euro zone in 2020. A s there is very little monetary policy space in the euro zone, in all likelihood fiscal policy will then become much more expansionary. Such a choice would be consistent with recent developments in the macroeconomic literature , as a growing number of authors and theories suggest a more active use of fiscal policy in a low-interest-rate environment.