Socio-economic development and fiscal policy: lessons from the cohesion countries for the new member states
AbstractThis paper examines the link between socio-economic development and fiscal policy. We introduce an indicator for socio-economic development (SEDI) and investigate its relationship with different fiscal variables, using data for the cohesion countries, namely Greece, Portugal, Spain and Ireland for 1980-1999. We find that an improvement in the net lending position of the government, as well as a fall in the level of public debt, would be beneficial for socio-economic development in the medium term. Furthermore, fiscal consolidation is found to be more relevant for promoting socio-economic development in the cohesion countries than in the other EU-15 Member States. Our results provide support for incentives to curb spending, such as the fiscal criteria of the Maastricht Treaty or the Stability and Growth Pact. JEL Classification: H6, H5, I0
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Find related papers by JEL classification:
- H6 - Public Economics - - National Budget, Deficit, and Debt
- H5 - Public Economics - - National Government Expenditures and Related Policies
- I0 - Health, Education, and Welfare - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-10-04 (All new papers)
- NEP-EEC-2005-10-04 (European Economics)
- NEP-PBE-2005-10-04 (Public Economics)
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