Cyclical asymmetry in fiscal policy, debt accumulation and the Treaty of Maastricht
AbstractIn this paper we present a stylised framework of fiscal policy determination that considers both structural targets and cyclical factors. Applying this framework to a sample of 16 OECD countries, we find evidence of significant asymmetry in the reaction of fiscal policy to positive and negative cyclical conditions, with budgetary balances deteriorating in contractions and not improving in expansions. This asymmetry appears to have contributed significantly to debt accumulation. We find no evidence that EU fiscal rules have reduced the ability of governments to conduct stabilisation policy between 1992 and 2000.
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.
Bibliographic InfoPaper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 531.
Date of creation: Dec 2004
Date of revision:
stabilization; fiscal policy; government debt; fiscal rules;
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H6 - Public Economics - - National Budget, Deficit, and Debt
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-01-24 (All new papers)
- NEP-MAC-2006-01-24 (Macroeconomics)
- NEP-PBE-2006-01-24 (Public Economics)
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.:
- Bouthevillain, Carine & Cour-Thimann, Philippine & van de Dool, Gerrit & Hernández de Cos, Pablo & Langenus, Geert & Mohr, Matthias & Momigliano, Sandro & Tujula, Mika, 2001.
"Cyclically adjusted budget balances: an alternative approach,"
Working Paper Series
0077, European Central Bank.
- Bouthevillain, C. & Van Den Dool, G. & Langenus, G. & Mohr, M. & Momigliano, S. & Tujula, M. & De Cos, P.H., 2001. "Cyclically Adjusted Budget Balances: an Alternative Approach," Papers 77, Quebec a Montreal - Recherche en gestion.
- Francesco Zollino, 2004. "Social mobility and endogenous cycles in redistribution," Temi di discussione (Economic working papers) 505, Bank of Italy, Economic Research and International Relations Area.
- 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.
- Zvi Hercowitz & Michel Strawczynski, 2004. "Cyclical Ratcheting in Government Spending: Evidence from the OECD," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 353-361, February.
- Marco BUTI & Daniele FRANCO & Hedwig ONGENA, 1997.
"Budgeetary Policies during Recessions : Retrospective Application of the Stability and Growth Pact” to the Post-War Period,"
Discussion Papers (REL - Recherches Economiques de Louvain)
1997041, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- M. Buti & D. Franco & H. Ongena, 1997. "Budgetary Policies during Recessions - Retrospective Application of the "Stability and Growth Pact" to the Post-War Period," European Economy - Economic Papers 121, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-party System as a Repeated Game," Scholarly Articles 4552531, Harvard University Department of Economics.
- André Sapir & Marco Buti, 1998. "Economic policy in EMU," ULB Institutional Repository 2013/8078, ULB -- Universite Libre de Bruxelles.
- Mélitz, Jacques, 1997. "Some Cross-Country Evidence about Debt, Deficits and the Behaviour of Monetary and Fiscal Authorities," CEPR Discussion Papers 1653, C.E.P.R. Discussion Papers.
- Jordi GalÌ & Roberto Perotti, 2003.
"Fiscal policy and monetary integration in Europe,"
CEPR & CES & MSH, vol. 18(37), pages 533-572, October.
- Galí, Jordi & Perotti, Roberto, 2003. "Fiscal Policy and Monetary Integration in Europe," CEPR Discussion Papers 3933, C.E.P.R. Discussion Papers.
- Jordi Gali & Roberto Perotti, 2003. "Fiscal Policy and Monetary Integration in Europe," NBER Working Papers 9773, National Bureau of Economic Research, Inc.
- Buti, Marco & Franco, Daniele & Ongena, Hedwig, 1998. "Fiscal Discipline and Flexibility in EMU: The Implementation of the Stability and Growth Pact," Oxford Review of Economic Policy, Oxford University Press, vol. 14(3), pages 81-97, Autumn.
- Henning Bohn, 1998. "The Behavior Of U.S. Public Debt And Deficits," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 949-963, August.
- Artis, Michael J & Marcellino, Massimiliano, 1998.
"Fiscal Solvency and Fiscal Forecasting in Europe,"
CEPR Discussion Papers
1836, C.E.P.R. Discussion Papers.
- Michael Artis & Massimiliano Marcellino, . "Fiscal Solvency and Fiscal Forecasting in Europe," Working Papers 142, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Artis, M. & Marcellino, M., 1998. "Fiscal Solvency and Fiscal Forecasting in Europe," Economics Working Papers eco98/2, European University Institute.
- Nordhaus, William D, 1975. "The Political Business Cycle," Review of Economic Studies, Wiley Blackwell, vol. 42(2), pages 169-90, April.
- Martin Larch & Matteo Salto, 2005.
"Fiscal rules, inertia and discretionary fiscal policy,"
Taylor and Francis Journals, vol. 37(10), pages 1135-1146.
- Martin Larch & Matteo Salto, 2003. "Fiscal rules, inertia and discretionary fiscal policy," European Economy - Economic Papers 194, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.