Procyclicality of fiscal policy in European Union countries

Bram Gootjes and Jakob de Haan

Journal of International Money and Finance, 2022, vol. 120, issue C

Abstract: Using real-time data, we examine whether fiscal policy has been counter- or procyclical in a panel of 27 European Union (EU) member states over the period 2000–2015. We also investigate whether fiscal rules and government efficiency improve the cyclical reaction of fiscal policy. Our results suggest that even though fiscal plans in EU countries have an acyclical stance, budgetary outcomes are procyclical. Government efficiency and fiscal rules seem to reduce fiscal procyclicality. Further analysis also reveals that fiscal policy seems to be more procyclical in non-euro area countries and in times of economic prosperity.

Keywords: Fiscal policy; Procyclicality; Fiscal rules; Government efficiency (search for similar items in EconPapers)
JEL-codes: E32 E62 H6 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (39)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:120:y:2022:i:c:s0261560620302321

DOI: 10.1016/j.jimonfin.2020.102276

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