Has the Stability and Growth Pact Changed the Likelihood of Excessive Deficits in the European Union?
AbstractThis paper presents an empirical analysis of excessive deficit spells in the European Union using transition data methods. Probabilities of transition between excessive and nonexcessive deficit states are estimated with time-varying macroeconomic covariates as explanatory variables. The quantitative effects of discretionary fiscal and monetary policies and cyclical factors on transition probabilities are disentangled so that we can account for what factors and by how much they contributed to certain member countries' breaching of the Pact. Another finding is that the Stability and Growth Pact seems to have reinforced fiscal discipline in most of the member countries.
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Bibliographic InfoArticle provided by Research and Monetary Policy Department, Central Bank of the Republic of Turkey in its journal Central Bank Review.
Volume (Year): 8 (2008)
Issue (Month): 1 ()
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Stability and Growth Pact; Excessive deficits; Duration analysis; Discrete hazard models;
Find related papers by JEL classification:
- C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
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