Estimation of a fiscal policy rule for EMU countries (1984-2005)

Agustin Garcia, M. J. Arroyo, R. Minguez and J. Uxo

Applied Economics, 2009, vol. 41, issue 7, 869-884

Abstract: The primary objective of this article is to estimate a fiscal policy rule for each of the EMU member States from 1984 to 2005 in order to know if there has been a systematic response of the cyclically adjusted primary balance to output gap and debt level variations. Also, we aim to discover whether the change in the fiscal framework, which took place after 1992 has had a substantial impact on the fiscal policy applied. The principal novelty is that the estimation is performed simultaneously by means of a seemingly unrelated regression estimator model. We are thus able to obtain different coefficients for each country, while developing possible correlations between national fiscal policies, which would reveal the existence of common factors. The results provide clear evidence of a structural break in the rule after the introduction of the new fiscal regulations and, as the hypothesis of equality in the national coefficients of the rule is clearly rejected, reveal a need to consider specific national factors.

Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/00036840701720739 (text/html)
Access to full text is restricted to subscribers.

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:taf:applec:v:41:y:2009:i:7:p:869-884

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036840701720739

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().