Fiscal Regime Shifts in Portugal

Peter Claeys and Ricardo M. Sousa António Afonso
Authors registered in the RePEc Author Service: Ricardo Jorge Magalhães de Abreu Santos Sousa () and Antonio Afonso

No 2009/41, Working Papers from Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.

Abstract: We estimate changes in fiscal policy regimes in Portugal with a Markov Switching regression of fiscal policy rules for the period 1978-2007, using a new dataset of fiscal quarterly series. We find evidence of a deficit bias, while repeated reversals of taxes making the budget procyclical. Economic booms have typically been used to relax tax pressure, especially during elections. One-off measures have been preferred over structural ones to contain the deficit during economic crises. The EU fiscal rules prompted temporary consolidation, but did not permanently change the budgeting process.

Keywords: fiscal regimes; Markov Switching; Portugal. JEL classification: E62; E65; H11; H62. (search for similar items in EconPapers)
Date: 2009-10

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Working Paper: Fiscal Regime Shifts in Portugal (2009)
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