Expansionary fiscal consolidations in Europe: part of conventional wisdom?

Antonio Afonso

No 50, Money Macro and Finance (MMF) Research Group Conference 2006 from Money Macro and Finance Research Group

Abstract: In order to assess whether expansionary fiscal consolidations can be part of conventional wisdom, 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: 2007-02-02
New Economics Papers: this item is included in nep-eec, nep-mac and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:mmf:mmfc06:50

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