Fiscal Indulgence in Central Europe: Loss of the External Anchor
AbstractIn recent years, fiscal performance in Central Europe has steadily deteriorated, in contrast to the improvement in the Baltics. This paper explores the determinants of such differences among countries slated for EU accession. Regression estimates suggest that economic and institutional fundamentals do not provide a full explanation. An alternative explanation lies in the political economy of the accession process, and a game-theoretic model illustrates why a country with a stronger bargaining position might have an incentive to deviate from convergence to the Maastricht criteria. The model generates alternative fiscal policy regimes-allowing for regime shifts-depending on country characteristics and EU policies.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 04/62.
Date of creation: 01 Apr 2004
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Other versions of this item:
- Helge Berger & George Kopits & István P. Székely, 2007. "Fiscal Indulgence In Central Europe: Loss Of The External Anchor?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(1), pages 116-135, 02.
- Berger, Helge & Kopits, George & Székely, István P., 2006. "Fiscal indulgence in Central Europe: loss of the external anchor?," Discussion Papers 2006/9, Free University Berlin, School of Business & Economics.
- H6 - Public Economics - - National Budget, Deficit, and Debt
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-10-22 (All new papers)
- NEP-CBA-2005-10-22 (Central Banking)
- NEP-EEC-2005-10-22 (European Economics)
- NEP-MAC-2005-10-22 (Macroeconomics)
- NEP-PBE-2005-10-22 (Public Economics)
- NEP-TRA-2005-10-22 (Transition Economics)
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