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Fiscal policy in Central and Eastern Europe with real time data: cyclicality, inertia and the role of EU accession.
- Source :
- Applied Economics; Aug2013, Vol. 45 Issue 23, p3347-3359, 13p, 9 Charts, 1 Graph
- Publication Year :
- 2013
-
Abstract
- This article evaluates the cyclicality, inertia and effect of EU accession on fiscal policy in Central and Eastern Europe (CEE) using a real time dataset. Budget balances are found to react in a stabilizing way to economic activity – every extra percentage point of economic growth is associated with an improvement in the budget balance of 0.3 percentage points of Gross Domestic Product (GDP) – and there is no evidence of an asymmetric reaction to the cycle. Balances are much less inert than is typically found in Western Europe. However, there is clear evidence of a fiscal loosening in the run-up to EU accession. This began in 1999 in larger central European countries, often identified as ‘front-runners’. The other seven began loosening in 2001, after the Nice Treaty was agreed. For both sets of countries, this loosening cumulatively amounts to some 3% of GDP. [ABSTRACT FROM PUBLISHER]
- Subjects :
- FISCAL policy
PUBLIC finance
EUROPEAN Union membership
ECONOMICS
ECONOMIC policy
Subjects
Details
- Language :
- English
- ISSN :
- 00036846
- Volume :
- 45
- Issue :
- 23
- Database :
- Complementary Index
- Journal :
- Applied Economics
- Publication Type :
- Academic Journal
- Accession number :
- 79379571
- Full Text :
- https://doi.org/10.1080/00036846.2012.705428