Fiscal policies and business cycles in an enlarged euro area

Karsten Staehr ()

No 2007-03, Bank of Estonia Working Papers from Bank of Estonia

Abstract: This paper compares the cyclical properties of fiscal policies across the 12 original eurozone countries and the future members from Central and Eastern Europe. For the sample period 1995-2005, the fiscal balance exhibits less inertia and is more counter-cyclical in Central and Eastern European countries than in members of the eurozone. The main differences arise from the revenue side. Differences in the formation of fiscal policy between current and future eurozone countries decrease over time. Autonomous fiscal policy has little or no effect on cyclical variability in either of the two groups of countries. Counter-cyclical fiscal policy appears to be effective in Central and Eastern European countries, but largely ineffective in eurozone countries

Keywords: fiscla policy determinants; fiscal policy effects; eurozone expansion (search for similar items in EconPapers)
JEL-codes: E62 E63 E32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac, nep-pbe and nep-tra
Date: 2007-03-08, Revised 2007-03-08
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