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Fiscal Cyclicality and EMU

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  • Agustín S. Bénétrix

    ()
    (IIIS, Trinity College Dublin)

  • Philip R. Lane

    ()
    (IIIS, Trinity College Dublin and CEPR)

Abstract

For the set of EMU member countries, we examine cyclical patterns in fiscal outcomes. We find that there is significant time variation in fiscal cyclicality, with an improvement in the wake of the Maastricht Treaty but a deterioration after the creation of EMU. Furthermore, we show that the fiscal cycle is affected by the financial cycle in addition to the output cycle. The lessons for the current reforms of European economic and fiscal governance are manifest.

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Bibliographic Info

Paper provided by IIIS in its series The Institute for International Integration Studies Discussion Paper Series with number iiisdp403.

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Length: 29 pages
Date of creation: Jul 2012
Date of revision:
Handle: RePEc:iis:dispap:iiisdp403

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Keywords: Cyclicality; EMU;

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References

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Citations

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Cited by:
  1. Philip Lane, 2010. "External Imbalances and Fiscal Policy," The Institute for International Integration Studies Discussion Paper Series iiisdp314, IIIS.
  2. Philip R. Lane, 2012. "The European Sovereign Debt Crisis," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 49-68, Summer.
  3. Philip Lane, 2010. "Some Lessons for Fiscal Policy from the Financial Crisis," The Institute for International Integration Studies Discussion Paper Series iiisdp334, IIIS.
  4. Martin Plödt & Claire Reicher, 2014. "Primary surplus and debt projections based on estimated fiscal reaction functions for euro area countries," Kiel Working Papers 1900, Kiel Institute for the World Economy.
  5. Christopher Reicher, 2013. "A set of estimated fiscal rules for a cross-section of countries: Stabilization and consolidation through which instruments?," Kiel Working Papers 1850, Kiel Institute for the World Economy.
  6. Martin Plödt & Claire Reicher, 2014. "Estimating simple fiscal policy reaction functions for the euro area countries," Kiel Working Papers 1899, Kiel Institute for the World Economy.
  7. S. Devrim Yilmaz & Burak Saltoglu, 2013. "Why is it so Difficult and Complex to Solve the Euro Problem?," Centre for Growth and Business Cycle Research Discussion Paper Series 180, Economics, The Univeristy of Manchester.
  8. Reicher, Claire, 2014. "Systematic fiscal policy and macroeconomic performance: A critical overview of the literature," Economics Discussion Papers 2014-29, Kiel Institute for the World Economy.

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