Fiscal Politics in the Euro Area

Luc Eyraud, Vitor Gaspar and Tigran Poghosyan

No 2017/018, IMF Working Papers from International Monetary Fund

Abstract: This paper provides evidence of fiscal procyclicality, excessive deficits, distorted budget composition and poor compliance with fiscal rules in the euro area. Our analysis relies on real-time data for 19 countries participating in the euro area over 1999–2015. We look for, but do not find, conclusive evidence of bias in procedures in relation to country size. The paper also briefly reviews the literature on political economy factors and policy biases, and offers some reflections on the euro area architecture.

Keywords: WP; output gap; financial crisis; political economy factors; deficit bias; procyclicality; fiscal rules; policy bias; country size; debt ratio; EDP country; documents policy bias; country differentiation; discretionary fiscal policy; sample of EA country; fiscal policy coordination; reaction result; government yields of EA country; potential GDP; Fiscal stance; Fiscal governance; Global; Europe (search for similar items in EconPapers)
Pages: 44
Date: 2017-01-30
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Citations: View citations in EconPapers (37)

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