European Stability Pact: Deficit, Debt, and Economic Growth Mechanisms #3446878 (License: Personal Use)

The image presents a dual-path flowchart: one showing how increased public spending stimulates demand, boosts GDP, and raises revenues (positive loop), and another demonstrating how deficits lead to borrowing, rising debt, higher interest costs, and eventual growth suppression (snowball effect). Central to the diagram is the “Pacte de Stabilité Européen,” emphasizing deficit/debt reduction targets and their unintended consequences like crowding-out private investment.

Used in economics education, policy briefs, or EU governance articles to explain fiscal rules and their macroeconomic implications; targets students, policymakers, and analysts seeking clarity on austerity vs. stimulus trade-offs.