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Fiscal regime shifts in Portugal

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  • António Afonso

    ()

  • Peter Claeys

    ()

  • Ricardo Sousa

    ()

Abstract

We estimate changes in fiscal policy regimes in Portugal with a Markov Switching regression of fiscal policy rules for the period 1978-2007, using a new dataset of fiscal quarterly series. We find evidence of a deficit bias, while repeated reversals of taxes making the budget procyclical. Economic booms have typically been used to relax tax pressure, especially during elections. One-off measures have been preferred over structural ones to contain the deficit during economic crises. The EU fiscal rules prompted temporary consolidation, but did not permanently change the budgeting process.

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Bibliographic Info

Article provided by Springer in its journal Portuguese Economic Journal.

Volume (Year): 10 (2011)
Issue (Month): 2 (August)
Pages: 83-108

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Handle: RePEc:spr:portec:v:10:y:2011:i:2:p:83-108

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Related research

Keywords: Fiscal regimes; Markov Switching; Portugal; E62; E65; H11; H62;

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