Investigating heterogeneity in European fiscal behaviours
AbstractThe aim of this paper is to analyse the heterogeneity in fiscal behaviours in the euro zone. The fiscal behaviours are analysed according to a new specification in which the cyclically adjusted primary balance reacts to the change in the output gap, the public debt ratio, the inflation rate and the interest rate. Our study covers 12 countries in the euro zone during 1999–2010 using annual data from the AMECO database. We use the quantile regression methodology to test the fiscal rule. Our findings show the persistence in fiscal behaviour and counter‐cyclical fiscal policy. The results also show that fiscal responses differ according to the chosen quantile. In particular, a high fiscal indicator is associated with a debt‐stabilisation motive and concern about inflation. A shock analysis indicates how the fiscal dispersion could be changed according to the nature of the shock. The results of this paper are useful for understanding fiscal coordination and for improving the European fiscal framework.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Research in Economics.
Volume (Year): 66 (2012)
Issue (Month): 4 ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/622941
Fiscal policy; EMU; Quantile analysis;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
- F. Ballabriga & C. Martinez-Mongay, 2002. "Has EMU shifted policy?," European Economy - Economic Papers 166, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- repec:fip:fedgpr:y:2003:x:33 is not listed on IDEAS
- Woodford, Michael, 2001.
"Fiscal Requirements for Price Stability,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 33(3), pages 669-728, August.
- Peter Claeys, 2005.
"Policy Mix and Debt Sustainability: Evidence from Fiscal Policy Rules,"
CESifo Working Paper Series
1406, CESifo Group Munich.
- Peter Claeys, 2006. "Policy mix and debt sustainability: evidence from fiscal policy rules," Empirica, Springer, vol. 33(2), pages 89-112, June.
- Peter Claeys, 2005. "Policy mix and debt sustainability: evidence from fiscal policy rules," Economics Working Papers ECO2005/01, European University Institute.
- Galí, Jordi & Perotti, Roberto, 2003.
"Fiscal Policy and Monetary Integration in Europe,"
CEPR Discussion Papers
3933, C.E.P.R. Discussion Papers.
- Charles Wyplosz, 2006. "European Monetary Union: the dark sides of a major success," Economic Policy, CEPR & CES & MSH, vol. 21(46), pages 207-261, 04.
- Lane, Philip R., 2003.
"The cyclical behaviour of fiscal policy: evidence from the OECD,"
Journal of Public Economics,
Elsevier, vol. 87(12), pages 2661-2675, December.
- Philip R. Lane, 2002. "The Cyclical Behaviour of Fiscal Policy: Evidence from the OECD," Trinity Economics Papers 20022, Trinity College Dublin, Department of Economics.
- Roger Koenker & Kevin F. Hallock, 2001.
Journal of Economic Perspectives,
American Economic Association, vol. 15(4), pages 143-156, Fall.
- De Bandt, Olivier & Mongelli, Francesco Paolo, 2000. "Convergence of fiscal policies in the euro area," Working Paper Series 0020, European Central Bank.
- Kocenda, Evzen & Kutan, Ali M. & Yigit, Taner M., 2008. "Fiscal convergence in the European Union," The North American Journal of Economics and Finance, Elsevier, vol. 19(3), pages 319-330, December.
- Davide Furceri, 2009.
"Fiscal Convergence, Business Cycle Volatility and Growth,"
OECD Economics Department Working Papers
674, OECD Publishing.
- Davide Furceri, 2009. "Fiscal Convergence, Business Cycle Volatility, and Growth," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 615-630, 08.
- Manuel Coutinho Pereira & Artur Silva Lopes, 2010.
"Time-varying fiscal policy in the U.S,"
w201021, Banco de Portugal, Economics and Research Department.
- JÃ©rÃ´me Creel & Paola Monperrus-Veroni & Francesco Saraceno, 2009. "Fiscal policy is back in France and the United Kingdom!," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 31(4), pages 645-667, July.
- Hughes Hallett, Andrew & Weymark, Diana, 2002.
"The Cost of Heterogeneity in a Monetary Union,"
CEPR Discussion Papers
3223, C.E.P.R. Discussion Papers.
- Andrew Hughes Hallett & Diana N. Weymark, 2001. "The Cost of Heterogeneity in a Monetary Union," Vanderbilt University Department of Economics Working Papers 0128, Vanderbilt University Department of Economics.
- Forni, Lorenzo & Momigliano, Sandro, 2004.
"Cyclical sensitivity of fiscal policies based on real-time data,"
4315, University Library of Munich, Germany.
- Lorenzo Forni & Sandro Momigliano, 2004. "Cyclical sensitivity of fiscal policies based on real-time data," Temi di discussione (Economic working papers) 540, Bank of Italy, Economic Research and International Relations Area.
- Onorante, Luca, 2006. "Fiscal convergence before entering the EMU," Working Paper Series 0664, European Central Bank.
- Newey, Whitney K & Powell, James L, 1987. "Asymmetric Least Squares Estimation and Testing," Econometrica, Econometric Society, vol. 55(4), pages 819-47, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wendy Shamier).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.