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Ricardian fiscal regimes in the European Union

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Author Info
António Afonso () (European Central Bank, Postfach 160319, 60066 Frankfurt am Main, Germany)

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Abstract

The prevalence of either Ricardian or non-Ricardian fiscal regimes is important both for practical policy reasons and to assess fiscal sustainability, and this is of particular relevance for European Union countries. The purpose of this paper is to assess, with a panel data set, the empirical evidence concerning the existence of Ricardian fiscal regimes in EU-15 countries. The results give support to the Ricardian fiscal regime hypothesis throughout the sample period, and for sub-samples accounting for the dates of the Maastricht Treaty and for the setting-up of the Stability and Growth Pact. Additionally, electoral budget cycles also seem to play a role in fiscal behaviour.

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Paper provided by European Central Bank in its series Working Paper Series with number 558.

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Length: 44 pages
Date of creation: Nov 2005
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Handle: RePEc:ecb:ecbwps:20050558

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Related research
Keywords: Fiscal regimes European Union panel data models.

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Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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Cited by:
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  1. Christophe Rault & Antonio Alfonso, 2007. "What do we really know about fiscal sustainability in the EU? A panel data diagnostic," William Davidson Institute Working Papers Series wp893, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  2. António Afonso, 2007. "Expansionary fiscal consolidations in Europe: part of conventional wisdom?," Money Macro and Finance (MMF) Research Group Conference 2006 50, Money Macro and Finance Research Group. [Downloadable!]
  3. António Afonso & Christophe Rault, 2008. "What do we really Know about Fiscal Sustainability in the EU? A Panel Data Diagnostic," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  4. Jerome Creel & Etienne Farvaque, 2008. "Détermination du niveau des prix et finances publiques : le cas du Liban, 1965-2005," Documents de Travail de l'OFCE 2008-14, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
  5. António Afonso & Christophe Rault, 2007. "What We Really Know about Fiscal Sustainability in the EU? A Panel Data Diagnostic," Working Papers 2007/20, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
  6. António Afonso, 2006. "Expansionary fiscal consolidations in Europe - new evidence," Working Paper Series 675, European Central Bank. [Downloadable!]
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