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Fiscal Expectations on the Stability and Growth Pact: Evidence from Survey Data

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Author Info

  • Marcos Poplawski-Ribeiro
  • Jan-Christoph Rülke

Abstract

The paper uses survey data to analyze whether the Stability and Growth Pact (SGP) has changed financial market’s expectations on government budget deficits in France, Germany, Italy, and the UK. Our findings indicate that accuracy of financial experts’ deficit forecasts has increased in France during the SGP. The Pact seems to have also promoted a gain in credibility of European Commission’s deficit forecasts in France, Italy, and in the UK, particularly after its reform in 2005 and up to December 2007. Nevertheless, the National Fiscal Authorities’ forecasts of France, Germany, and Italy seem to have not been credible among market experts during the SGP. These results suggest that additional measures could be taken in order to make the fiscal rules of the Pact more credible among market specialists.

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Bibliographic Info

Paper provided by CEPII research center in its series Working Papers with number 2010-05.

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Date of creation: Mar 2010
Date of revision:
Handle: RePEc:cii:cepidt:2010-05

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Keywords: Expectations; Credibility; Stability and growth pact; Survey data;

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References

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  1. Poplawski Ribeiro, Marcos & Beetsma, Roel, 2008. "The political economy of structural reforms under a deficit restriction," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 179-198, March.
  2. Frederick van der Ploeg, 2007. "Prudent Budgetary Policy: Political Economy of Precautionary Taxation," CESifo Working Paper Series 1973, CESifo Group Munich.
  3. Marcos Poplawski Ribeiro, 2009. "New Evidence on the Effectiveness of Europe's Fiscal Restrictions," Working Papers 2009-13, CEPII research center.
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Cited by:
  1. Rossana Merola & Javier J. Pérez, 2012. "Fiscal forecast errors: governments vs independent agencies?," Banco de Espa�a Working Papers 1233, Banco de Espa�a.
  2. Nikolay Markov, 2010. "A Regime Switching Model for the European Central Bank," Research Papers by the Department of Economics, University of Geneva 10091, Département des Sciences Économiques, Université de Genève.
  3. Merola, Rossana & Pérez, Javier J., 2013. "Fiscal forecast errors: Governments versus independent agencies?," European Journal of Political Economy, Elsevier, vol. 32(C), pages 285-299.

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