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Expansionary fiscal consolidations in Europe: new evidence

Antonio Afonso

No 2006/18, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: In order to assess the existence of expansionary fiscal consolidations in Europe, panel data models for private consumption are estimated for the EU15 countries, using annual data over the period 1970–2005. Three alternative approaches to determine fiscal episodes are used, and the level of government indebtedness is also taken into account. The results show some evidence in favour of the existence of expansionary fiscal consolidations, for a few budgetary spending items (general government final consumption, social transfers, and taxes), depending on the specification and on the time span used. On the other hand, the possibility of asymmetric effects of fiscal episodes does not seem to be corroborated by the results.

Keywords: fiscal policy; expansionary fiscal consolidations; non-Keynesian effects; panel data models; European Union. (search for similar items in EconPapers)
JEL-codes: C23 E21 E62 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-eec, nep-knm, nep-mac and nep-pbe
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Citations: View citations in EconPapers (29)

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Journal Article: Expansionary fiscal consolidations in Europe: new evidence (2010) Downloads
Working Paper: Expansionary fiscal consolidations in Europe: new evidence (2006) Downloads
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More papers in Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa Department of Economics, ISEG - Lisbon School of Economics and Management, Universidade de Lisboa, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL.
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