The Impact of the Crisis on Budget Policy in Central and Eastern Europe
AbstractThis paper describes the particular impacts of the financial and economic crisis on Central and Eastern European (CEE) countries; studies pro-cyclicality of fiscal policies; discusses the impact of the crisis on fiscal policy; and takes a look at the policy response of various governments. After drawing some lessons for fiscal policy from previous emerging market crises, the paper concludes with some thoughts on the appropriate policy response from a more normative perspective. The key message of the paper is that the crisis should be used as an opportunity to introduce reforms to avoid future pro-cyclical fiscal policies, to increase the quality of budgeting and to increase credibility. These reforms should include fiscal responsibility laws comprising medium-term fiscal frameworks, fiscal rules and independent fiscal councils. When fiscal consolidation is accompanied by fiscal reforms that increase credibility, non-Keynesian effects may offset the contraction caused by the consolidation to some extent. JEL classification: C32, E62, H60 Keywords: Crisis, budget policy, fiscal policy, Central and Eastern Europe, CEE, CESEE
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Bibliographic InfoArticle provided by OECD Publishing in its journal OECD Journal on Budgeting.
Volume (Year): 10 (2010)
Issue (Month): 1 ()
Other versions of this item:
- Zsolt Darvas, 2009. "The impact of the crisis on budget policy in Central and Eastern Europe," Working Papers 318, Bruegel.
- Zsolt Darvas, 2009. "The Impact of the Crisis on Budget Policy in Central and Eastern Europe," Working Papers 0904, Department of Mathematical Economics and Economic Analysis, Corvinus University of Budapest.
- Zsolt Darvas, 2009. "The Impact of the Crisis on Budget Policy in Central and Eastern Europe," IEHAS Discussion Papers 0924, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
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