[6]  A public sector that is largely insensitive to interest rate changes significantly reduces the effectiveness of monetary policy, in particular in the euro area, where governments account for nearly half of total spending. An unresponsive fiscal authority disregards the broad empirical evidence that fiscal policy is particularly effective at the lower bound. [7]  Fiscal restraint was, of course, not without reason.
In many countries, years of cyclical upswing before the global financial crisis had not been used to build sufficient fiscal buffers. Elevated debt levels carry a particularly high vulnerability in a decentralised currency union, where the absence of a fully consolidated public balance sheet exposes governments to a higher risk of self-fulfilling debt crises.