The Impact of the Crisis on Budget Policy in Central and Eastern Europe
AbstractThis paper describes the particular impacts of the financial and economic crisis on Central and Eastern European (CEE) countries, studies pro-cyclicality of fiscal policies, discusses the impact of the crisis on fiscal policy, and the policy response of various governments. After drawing some lessons for fiscal policy from previous emerging market crises, the paper concludes with some thoughts on the appropriate policy response from a more normative perspective. The key message of the paper is that the crisis should be used as an opportunity to introduce reforms to avoid future pro-cyclical fiscal policies, to increase the quality of budgeting and to increase credibility. These reforms should include fiscal responsibility laws comprising medium-term fiscal frameworks, fiscal rules, and independent fiscal councils. When fiscal consolidation is accompanied by fiscal reforms that increase credibility, non-Keynesian effects may offset to some extent the contraction caused by the consolidation.
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Bibliographic InfoPaper provided by Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences in its series IEHAS Discussion Papers with number 0924.
Length: 66 pages
Date of creation: Nov 2009
Date of revision:
budget policy; Central and Eastern European (CEE) countries; financial and economic crisis;
Other versions of this item:
- Zsolt Darvas, 2010. "The Impact of the Crisis on Budget Policy in Central and Eastern Europe," OECD Journal on Budgeting, OECD Publishing, vol. 10(1), pages 1-42.
- Zsolt Darvas, 2009. "The impact of the crisis on budget policy in Central and Eastern Europe," Working Papers 318, Bruegel.
- Zsolt Darvas, 2009. "The Impact of the Crisis on Budget Policy in Central and Eastern Europe," Working Papers 0904, Department of Mathematical Economics and Economic Analysis, Corvinus University of Budapest.
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-12-11 (All new papers)
- NEP-EEC-2009-12-11 (European Economics)
- NEP-TRA-2009-12-11 (Transition Economics)
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