The Effect of Fiscal Policy Asymmetries on Business Cycle Correlation in the EU

Ladislava Issever Grochová, Petr Rozmahel and Marek Litzman
Additional contact information
Ladislava Issever Grochová: Faculty of Business and Economics, Mendel University in Brno
Petr Rozmahel: Faculty of Business and Economics, Mendel University in Brno
Marek Litzman: Faculty of Business and Economics, Mendel University in Brno

Scientific Annals of Economics and Business (continues Analele Stiintifice), 2022, vol. 69, issue 3, 361 - 376

Abstract: This paper reviews the role of bilateral fiscal differences, fiscal indiscipline and their joint effects in particular in determining business cycle synchronicity in the European Union (EU). Panel data comprising 28 EU members from 1999–2019 are used in the analysis. The two-step Instrumental Variable–Generalized Method of Moments (IV–GMM) is employed to estimate the effects of examined fiscal measures on business cycle correlations. The study finds that fiscal indiscipline doubles the negative effect of increasing fiscal differences on business cycle correlation compared to fiscally disciplined country-pairs. The findings suggest reopening the debate on fiscal policy coordination across Europe.

Keywords: business cycle synchronicity; fiscal indiscipline; fiscal differences; fiscal policy. (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://saeb.feaa.uaic.ro/index.php/saeb/article/view/1678 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aic:saebjn:v:69:y:2022:i:3:p:361-376:n:6

Access Statistics for this article

More articles in Scientific Annals of Economics and Business (continues Analele Stiintifice) from Alexandru Ioan Cuza University, Faculty of Economics and Business Administration Contact information at EDIRC.
Bibliographic data for series maintained by Sireteanu Napoleon-Alexandru ().