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We estimate various panel fiscal reaction functions, including those of the main categories of general government revenue and expenditure for 12 Euro area member states over the 1970-2013 period. We find that in the peripheral countries where sovereign bond yields decreased sharply in the years 1996-2007, fiscal stance ceased to respond to sovereign debt accumulation. This was due to lack of sufficient adjustment in government current expenditure and direct taxes. In contrast, in the core member states, which did not benefit from yields' convergence related to the Euro area establishment, responsiveness of fiscal stance to inherited sovereign debt increased during 1996-2007. This was achieved mainly through pronounced adjustments in government current expenditure. The findings are robust to various changes in modelling approach. [ABSTRACT FROM AUTHOR]

We identify fiscal policy shocks in the EU new member states using four different methods. We use panel data techniques to estimate the output response to these shocks. We find that investment and export growth increase after fiscal consolidation and decelerate after fiscal stimulus when the shocks are expenditure-based. In contrast, private consumption does not respond to fiscal policy shocks. Expenditure-based fiscal consolidations reduce wages, supporting the view that fiscal consolidation of such composition enhances the competitiveness and profitability of domestic enterprises. In contrast, we do not find evidence of fiscal shocks affecting households' confidence. [ABSTRACT FROM AUTHOR]

The goal of this article is to point out the likely reasons for the differences between the results obtained by Roxana Radulescu and David Barlow and those presented in most other research papers on the growth determinants in the post-communist countries. The authors also present the consequences of the impact of the specific composition of the EBRD index on the results of analysis obtained on the basis of econometric models, in which the index is used as a variable. JEL classifications: P21, C20. [ABSTRACT FROM AUTHOR]