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This presentation was given at a workshop entitled 'European Public Finances Through the Financial Crisis' at the ZEW Centre for European Economic Research, Mannheim, Germany. It forms part of a programme of work funded by the ESRC entitled "Combining micro- and macro- economic approaches to fiscal policy evaluation", which is conducted jointly by the ESRC Centre for the Microeconomic Analysis of Public Policy at IFS and the ESRC Centre for Macroeconomics.