 The cyclically-adjusted primary balance: A novel approach for the euro areaGiovanni Carnazza, Paolo Liberati and Agnese Sacchi Journal of Policy Modeling, 2020, vol. 42, issue 5, 1123-1145 Abstract: This paper presents novel estimates for the cyclically-adjusted primary balance for 18 countries of the Euro area over years 1999–2017. We improve the methodology adopted by the European Commission by using quarterly rather than annual frequency data and providing accurate identification of the budgetary items whose response can be considered automatic to the economic cycle. This disaggregated outcome combined with high frequency data marks a significant improvement with respect to previous studies. The empirical analysis is implemented on two sub-periods to examine the impact of governments’ discretionary fiscal policy before and after the Great Recession. The most striking policy implication is that even though the budgetary policy of most European countries can be qualified in principle as anticyclical, this outcome has been weakened by the impact of discretionary policies of many governments especially after the crisis. The results are robust to the use of different de-trending methods. Keywords: Fiscal policy; Cyclically-adjusted primary balance; Automatic stabilizers; Economic cycle; Great recession; De-trending methods (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:42:y:2020:i:5:p:1123-1145 DOI: 10.1016/j.jpolmod.2020.01.005 Access Statistics for this article Journal of Policy Modeling is currently edited by A. M. Costa More articles in Journal of Policy Modeling from Elsevier |
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