Real time analysis of euro area fiscal policies: adjustment to the crisis

Maritta Paloviita and Helvi Kinnunen

No 21/2011, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: Using real time data from the OECD and fiscal policy reaction functions, this study explores euro area fiscal policies since the late 1990s. Both iscretionary plans for the budget year and policy changes during budget implementation stages are investigated. The main focus is on the fiscal adjustment to the recent financial and economic crisis. The results suggest that during the monetary union (EMU) euro area planned fiscal policies have been long-term oriented and countercyclical. In the implementation stages new policy decisions have been made as a response to unexpected economics developments. We provide evidence that the crisis had a clear impact on discretionary policies. Due to the increased uncertainty, the crisis emphasized the impact of cyclical developments on fiscal planning. In the implementation stages, huge forecast errors made in budget planning were observed. As a consequence, new decisions were made in order to alleviate negative impacts of the crisis on the euro area economies.

JEL-codes: E32 E62 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/212200/1/bof-rdp2011-021.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp2011_021

Access Statistics for this paper

More papers in Bank of Finland Research Discussion Papers from Bank of Finland Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().