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Fiscal Regime Shifts in Portugal

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Author Info
António Afonso () (Department of Economics, Technical University of Lisbon)
Peter Claeys () (Faculty of Economics, University of Barcelona)
Ricardo M. Sousa () (Department of Economics and Economic Policies Research Unit, University of Minho)

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Abstract

We estimate changes in fiscal policy regimes in Portugal with a Markov Switching regression of fiscal policy rules for the period 1978-2007, using a new dataset of fiscal quarterly series. We find evidence of a deficit bias, while repeated reversals of taxes making the budget procyclical. Economic booms have typically been used to relax tax pressure, especially during elections. One-off measures have been preferred over structural ones to contain the deficit during economic crises. The EU fiscal rules prompted temporary consolidation, but did not permanently change the budgeting process.

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Publisher Info
Paper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 200921.

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Length: 28 pages
Date of creation: Oct 2009
Date of revision: Oct 2009
Handle: RePEc:ira:wpaper:200921

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Related research
Keywords: fiscal regimes; Markov Switching; Portugal.;

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