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Fiscal Regime Shifts in Portugal

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  • 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)

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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Bibliographic 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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Postal: Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona
Web page: http://www.ub.edu/irea/
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Keywords: fiscal regimes; Markov Switching; Portugal.;

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