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Fiscal policy in Central and Eastern Europe with real time data: Cyclicality, inertia and the role of EU accession

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  • John Lewis

Abstract

This paper evaluates the cyclicality, inertia and effect of EU accession on fiscal policy in Central and Eastern Europe using a real time dataset. Budget balances are found to react in a stabilising way to economic activity, and they are less inert than is typically found in Western Europe. There is clear evidence of a fiscal loosening in the run-up to EU accession. This began in 1999 in larger central European countries, often identified as “front-runners”. The other seven began loosening in 2001, after the Nice Treaty had been agreed and their EU entry confirmed. For both sets of countries, this loosening cumulatively amounts to some 3% of GDP.          ÂÂÂ

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Bibliographic Info

Paper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 214.

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Date of creation: Jul 2009
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Handle: RePEc:dnb:dnbwpp:214

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Keywords: Central and Eastern Europe; Fiscal Policy; Real Time Data; EU Accession.;

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References

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  2. 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.
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Cited by:
  1. Victor Duarte Lledo & Marcos Poplawski-Ribeiro, 2011. "Fiscal Policy Implementation in Sub-Saharan Africa," IMF Working Papers 11/172, International Monetary Fund.
  2. Roel Beetsma & Benjamin Bluhm & Massimo Giuliodori & Peter Wierts, 2011. "From First-Release to Ex-Post Fiscal Data: Exploring the Sources of Revision Errors in the EU," Tinbergen Institute Discussion Papers 11-080/2, Tinbergen Institute.
  3. Rilind Kabashi, 2014. "The Cyclical Character of Fiscal Policy in Transition Countries," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 57-73.
  4. Roel Beetsma & Benjamin Bluhm & Massimo Giuliodori & Peter Wierts, 2011. "From First-Release to Ex-Post Fiscal Data: Exploring the Sources of Revision Errors in the EU," Tinbergen Institute Discussion Papers 11-080/2, Tinbergen Institute.
  5. Beetsma, Roel & Giuliodori, Massimo & Walschot, Mark & Wierts, Peter, 2013. "Fifty years of fiscal planning and implementation in the Netherlands," European Journal of Political Economy, Elsevier, vol. 31(C), pages 119-138.
  6. Jacopo Cimadomo, 2011. "Real-Time Data and Fiscal Policy Analysis: a Survey of the Literature," Working Papers 2011-20, CEPII research center.

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