What Are Their Words Worth?: The Political Plans and Economic Pains of Fiscal Consolidations in the New EU Member States

Jan Zápal and OndÅej Schneider
Authors registered in the RePEc Author Service: Jan Zapal

Eastern European Economics, 2006, vol. 44, issue 5, 6-37

Abstract: This paper tracks the behavior of the fiscal authorities of the ten new EU member states in the period that immediately preceded their EU accession in 2004. We analyze the reasons that led to fiscal consolidations in the new members and present evidence from the preaccession economic and convergence programs of the ten inductees concerning the planed steps of the fiscal authorities and contrast them the subsequent experience. Throughout the paper, we identify two groups of countries that significantly differ in fiscal behavior. Our key finding concerning the behavior of the group of fiscally irresponsible countriesâfour central European countries and two Mediterranean statesâis that their current problems with high budget deficits originate in their lax approach and unwillingness to implement politically costly expenditure cuts, which is apparent in their repeated budget revisions and deferral of deficit reduction.

Date: 2006
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Working Paper: What are their Words Worth? Political Plans and Economic Pains of Fiscal Consolidations in New EU Member States (2006)
Working Paper: What Are Their Words Worth? Political Plans And Economic Pains Of Fiscal Consolidations In New EU Member States (2006)
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