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Budgeting versus implementing fiscal policy in the EU

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  • Beetsma, Roel
  • Giuliodori, Massimo
  • Wierts, Peter

Abstract

Using real-time data from Europe's Stability and Convergence Programs, we explore how fiscal plans and their implementation in the EU are determined. We find that (1) implemented budgetary adjustment falls systematically short of planned adjustment and this shortfall increases with the projection horizon, (2) variability in the eventual fiscal outcomes is dominated by the implementation errors, (3) there is a limited role for "traditional" political variables, (4) stock-flow adjustments are more important when plans are more ambitious, and (5), most importantly, both the ambition in fiscal plans and their implementation benefit from stronger national fiscal institutions. We emphasise also the importance of credible plans for the eventual fiscal outcomes.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7285.

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Date of creation: Apr 2009
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Handle: RePEc:cpr:ceprdp:7285

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Keywords: EU; Fiscal policy; fiscal rules; implementation; medium-term budgetary framework; planning; real-time data;

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References

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Citations

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Cited by:
  1. Holm-Hadulla, Fédéric & Hauptmeier, Sebastian & Rother, Philipp, 2010. "The impact of numerical expenditure rules on budgetary discipline over the cycle," Working Paper Series 1169, European Central Bank.
  2. Philip Lane, 2011. "The Irish Crisis," The Institute for International Integration Studies Discussion Paper Series iiisdp356, IIIS.
  3. Ioannou, Demosthenes & Stracca, Livio, 2011. "Have euro area and EU economic governance worked? Just the facts," Working Paper Series 1344, European Central Bank.
  4. Agustín S. Bénétrix & Philip R. Lane, 2010. "International Differences in Fiscal Policy During the Global Crisis," NBER Working Papers 16346, National Bureau of Economic Research, Inc.
  5. Philip Lane, 2010. "Some Lessons for Fiscal Policy from the Financial Crisis," The Institute for International Integration Studies Discussion Paper Series iiisdp334, IIIS.
  6. Lane, Philip R., 2009. "A New Fiscal Strategy for Ireland," The Economic and Social Review, Economic and Social Studies, vol. 40(2), pages 233–253.
  7. Cepparulo, Alessandra & Gastaldi, Francesca & Giuriato, Luisa & Sacchi, Agnese, 2011. "Budgeting versus implementing fiscal policy:the Italian case," MPRA Paper 32474, University Library of Munich, Germany.
  8. Christie Smith, 2011. "Conference summary: New Zealand's macroeconomic imbalances -- causes and remedies," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 74, pages 5-10, September.
  9. Niels Gilbert & Jeroen Hessel & Silvie Verkaart, 2013. "Towards a Stable Monetary Union: What Role for Eurobonds?," DNB Working Papers 379, Netherlands Central Bank, Research Department.

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