Fiscal and Monetary Institutions in Central, Eastern and South-Eastern European Countries
AbstractThis article studies the role of fiscal and monetary institutions in macroeconomic stability and budgetary control in central, eastern and south-eastern European countries (CESEE) in comparison with other OECD countries. CESEE countries tend to grow faster (or at least tended to grow faster before the crisis) and have more volatile output than non-CESEE OECD countries, which has implications for macroeconomic management: better fiscal and monetary institutions are needed to avoid pro-cyclical policies. The article develops a Budgetary Discipline Index to assess whether good fiscal institutions underpin good fiscal outcomes. Even though most CESEE countries have low scores, the debt/GDP ratios declined before the crisis. This was largely the consequence of a very favourable relationship between the economic growth rate and the interest rate, but such a favourable relationship is not expected in the future. Econometric estimations confirm that better monetary institutions reduce macroeconomic volatility and that countries with better budgetary procedures have better fiscal outcomes. All these factors call for improved monetary institutions, stronger fiscal rules and better budgetary procedures in CESEE countries.
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Bibliographic InfoArticle provided by OECD Publishing in its journal OECD Journal on Budgeting.
Volume (Year): 11 (2011)
Issue (Month): 1 ()
Other versions of this item:
- Zsolt Darvas & Valentina Kostyleva, 2011. "Fiscal and Monetary Institutions in Central, Eastern and South-Eastern European Countries," Working Papers 1102, Department of Mathematical Economics and Economic Analysis, Corvinus University of Budapest.
- Zsolt Darvas & Valentina Kostyleva, 2011. "Fiscal and Monetary Institutions in Central, Eastern and South-Eastern European Countries," IEHAS Discussion Papers 1127, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
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