Heterogeneous effects of fiscal rules: The Maastricht fiscal criterion and the counterfactual distribution of government deficits✰

Francesca Caselli and Philippe Wingender

European Economic Review, 2021, vol. 136, issue C

Abstract: This paper estimates the effect of the Maastricht treaty’s fiscal criterion on the distribution of EU countries’ general government deficits. Using a treatment effects approach, we find that the 3 percent deficit ceiling acts as a “magnet”, increasing the number of observations around the threshold by 20 percent, while reducing the occurrence of both large government deficits and surpluses. Our results imply that the rule had an effect on deficits even when it was not complied with. Country-specific results under the rank invariance assumption indicate that all countries have seen their fiscal position improve on average because of the deficit rule.

Keywords: Fiscal rules; Fiscal policy; Treatment effects; Heterogeneous effects (search for similar items in EconPapers)
JEL-codes: C14 C31 E61 E62 H62 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:136:y:2021:i:c:s001429212100101x

DOI: 10.1016/j.euroecorev.2021.103748

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