 Delayed mimicking: the timing of fiscal interactions in EuropeEuropean Journal of Political Economy, 2018, vol. 55, issue C, 97-118 Abstract: Fiscal interactions in Europe are a major challenge. Countries can cooperate or be engaged in a tax or a yardstick competition process. This paper uses a Spatial Dynamic Panel Data model (SDPD) to test the timing of fiscal stances interactions in Europe. Results show that fiscal interactions are not contemporaneous: governments mimic the behavior of neighboring governments on the last year, leading to a kind of “delayed mimicking” behaviors. This result is then used and deepened to discriminate between the three main rationales for fiscal interactions. Using original weighting schemes based on political proximity and similarities between investment contexts, we show that fiscal interactions in Europe are likely due to yardstick competition. Implications are twofold: on one hand controlling for delayed interactions when fiscal interactions are estimated is necessary, and, on the other hand, more organizations are needed in Europe in order to foster cooperation and thus to improve fiscal policy efficiency. Keywords: Fiscal policy interactions; Spatial Dynamic Panel Data model; Europe (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:55:y:2018:i:c:p:97-118 DOI: 10.1016/j.ejpoleco.2017.11.005 Access Statistics for this article European Journal of Political Economy is currently edited by J. De Haan, A. L. Hillman and H. W. Ursprung More articles in European Journal of Political Economy from Elsevier |
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