Fiscal Position and Size of Automatic Stabilizers in the CESEE EU Member States – Implications for Discretionary Measures

Markus Eller

Focus on European Economic Integration, 2009, issue 2, 78-84

Abstract: In the EU Member States in Central, Eastern and Southeastern Europe (CESEE-10), budgetary positions have been observed to react less strongly to GDP changes than in the euro area. In the observation period, automatic stabilizers mostly operated on the revenue side, while the response of government expenditure to GDP changes was quite inelastic. In most CESEE-10 countries, the government expenditure-to-GDP ratio is smaller than the euro area average. Thus, the automatic response of the budget balance to the present downturn is expected to be rather moderate. Moreover, the room for discretionary fiscal measures is limited as there are no sufficient buffers owing to the predominantly procyclical fiscal stance during past “boom times” in several countries and, currently, government debt markets in many countries are rather illiquid.

Keywords: Automatic stabilizers; fiscal space; output gap; cyclicality of fiscal policy; discretionary fiscal policy (search for similar items in EconPapers)
JEL-codes: E62 H6 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (17)

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