Fiscal policy in Central and Eastern Europe with real time data: Cyclicality, inertia and the role of EU accession

John Lewis

DNB Working Papers from Netherlands Central Bank, Research Department

Abstract: This paper evaluates the cyclicality, inertia and effect of EU accession on fiscal policy in Central and Eastern Europe using a real time dataset. Budget balances are found to react in a stabilising way to economic activity, and they are less inert than is typically found in Western Europe. There is clear evidence of a fiscal loosening in the run-up to EU accession. This began in 1999 in larger central European countries, often identified as “front-runners”. The other seven began loosening in 2001, after the Nice Treaty had been agreed and their EU entry confirmed. For both sets of countries, this loosening cumulatively amounts to some 3% of GDP.          Â

Keywords: Central and Eastern Europe; Fiscal Policy; Real Time Data; EU Accession.           (search for similar items in EconPapers)
JEL-codes: E62 H6 E61 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-mac and nep-tra
Date: 2009-07
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Persistent link: http://EconPapers.repec.org/RePEc:dnb:dnbwpp:214

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