Some Stylized Facts on Non-Systematic Fiscal Policy in the Euro Area

Massimiliano Marcellino

No 3635, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We derive a set of stylized facts on the effects of non-systematic fiscal policy in the four largest countries of the Euro area, and discuss their implications for the fiscal policy coordination debate, for the effectiveness of fiscal shocks in stabilizing the economies, and for the interaction of fiscal and monetary policy. We find relevant differences across countries in the effects of non-systematic fiscal policy, and substantial uncertainty about the size of these effects, which casts doubts on the possibility of a fiscal coordination. Moreover, expenditure shocks are usually rather ineffective in increasing output growth or reducing its volatility, and can require deficit financing. Tax policies also appear to have minor effects on output, and tax cuts could also require deficit financing. Finally, fiscal shocks appear to have an impact on interest rates, either direct or through the output gap and inflation while, in general, the effects of monetary policy on disbursements and receipts seem to be minor.

Keywords: Fiscal policy; Policy coordination; Stabilization policy; Monetary policy (search for similar items in EconPapers)
JEL-codes: E62 E63 H30 (search for similar items in EconPapers)
Date: 2002-11
New Economics Papers: this item is included in nep-eec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Journal Article: Some stylized facts on non-systematic fiscal policy in the Euro area (2006)
Working Paper: Some stylized facts on non-systematic fiscal policy in the Euro area
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