Real time uncertainty in fiscal planning and debt accumulation in the euro area

Maritta Paloviita ()

International Economics and Economic Policy, 2017, vol. 14, issue 1, No 3, 43-59

Abstract: Abstract Using real time data from the OECD this study explores euro area fiscal policies since the late 1990s. The results indicate that in the so-called periphery countries (Greece, Ireland, Italy, Portugal and Spain) ex ante fiscal plans have been more sensitive to economic cycles in the countercyclical direction than in the other euro area countries. Accumulated debt ratios in the periphery reflect high initial debt ratios, underlying deficit biases and cumulated errors in the data on macroeconomic imbalances. Overall, reliable statistics, balanced macroeconomic developments and longer-term policy orientation are crucial for sound and sustainable public finances.

Keywords: Fiscal policy; Debt accumulation; Real time data; Cyclical sensitivity; Economic crisis (search for similar items in EconPapers)
JEL-codes: E32 E62 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s10368-015-0319-x

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