From the introduction:

Franz Nauschnigg follows a similar approach in his chapter on "Growth-friendly fiscal consolidation". Nauschnigg sets out the basic principles for a growth-friendly fiscal consolidation ? specifically that, if the government reduces its deficit, other sectors must reduce their surplus. Otherwise the economy will fall back into recession, as output adjusts downwards to bring the desired but incompatible savings-investment decisions of the private and public sector and the current account into line. Nauschnigg, who served as economic adviser to three different ministers of Finance in Austria from 1995 to 1999, illustrates his argument by referring to two periods of fiscal consolidation in Austria: a growth-friendly fiscal consolidation from 1995 to 1999 under an Austro-Keynesian paradigm, and a growth-damaging fiscal consolidation in 2001 under a neo-liberal paradigm. His conclusions are also encouraging: a growth-friendly fiscal consolidation is possible. In particular, it is possible to compensate public demand by private demand but this requires policy action: specifically, in Austria in the second half of the 1990s, different measures to lower the savings rate were taken. Moreover, infrastructure spending which had traditionally been financed out of the budget was shifted to entities belonging to the private sector. Public demand was replaced by private demand, which had the effect of lowering the budget deficit. Finally, Nauschnigg discusses the relevance of his argument for the current situation in the European Union, and argues that its member states would be ill-advised to rely on an improvement in the current account as a way to grow out of their fiscal deficits.