The Cyclically Adjusted Budget Balance in EU Fiscal Policymaking. Love at First Sight Turned into a Mature Relationship

Martin Larch and Alessandro Turrini

MPRA Paper from University Library of Munich, Germany

Abstract: The cyclically adjusted budget balance (CAB) plays a key role in the EU fi scal surveillance framework. It started off in a supporting role in the shadow of the headline defi cit and, before long, turned into the linchpin of the rules of the Stability and Growth Pact. The steep ascent was driven by high expectations which, with the passing of time, were only partly met. The everyday practice of the EU fi scal surveillance rapidly revealed a number of caveats of the CAB which, at times, hampered the effectiveness of fi scal surveillance. This paper provides a comprehensive review of the changing fortunes of the CAB in the EU fi scal surveillance framework. It portrays its main shortcomings and the way they are dealt with in practice.

Keywords: Cyclically adjusted budget balance; Stability and Growth Pact; Fiscal Policy (search for similar items in EconPapers)
JEL-codes: E61 E62 H30 H60 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-mac
References: View complete reference list from CitEc
Citations: View citations in EconPapers (46)

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Related works:
Working Paper: The cyclically-adjusted budget balance in EU fiscal policy making: A love at first sight turned into a mature relationship (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:20594

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