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Determinants of fiscal budget volatility in old versus new EU member states

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  • Eugenia-Ramona Mara

Abstract

In this study we perform an analysis of the volatility of the budget deficit for EU countries. We address this issue starting from the new requirements of fiscal discipline imposed by the Treaty on Stability, Coordination and Governance adopted by 25 European Union member states and taking into account the economic crisis impact. The major purpose of this study is to identify the most significant determinants of budget deficit volatility in a comparative study for old EU member states and New Member States (NMS). This study aims to test the impact of macroeconomic variables such as public expenditures, economic growth rate, and unemployment on the budget balance volatility, based on panel data. The final purpose of the article is to reveal the strategies to stop the immense increase in fiscal deficits and to regain fiscal stability to fulfil the new rules of fiscal governance. We anticipate that the implementation of this new fiscal discipline requires a more efficient public sector for both old and NMS and a reconsideration of state intervention in the economy. JEL Classification: H62; E62; H3; H61;

Suggested Citation

  • Eugenia-Ramona Mara, 2012. "Determinants of fiscal budget volatility in old versus new EU member states," Working Papers Department of Economics 2012/31, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    • Handle: RePEc:ise:isegwp:wp312012
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    1. Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, vol. 33(5), pages 903-933, May.
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    Cited by:

    1. Dybczak, Kamil & Melecky, Martin, 2014. "EU fiscal stance vulnerability: Are the old members the gold members?," Economic Modelling, Elsevier, vol. 38(C), pages 87-101.
    2. repec:prg:jnlpep:v:preprint:id:662:p:1-20 is not listed on IDEAS
    3. repec:mth:ijafr8:v:8:y:2018:i:3:p:229-242 is not listed on IDEAS
    4. Lucia Mihóková & Radovan Dráb & Andrea Kralik, 2018. "Assessing the Impact of Tax Evasion on Long-Term Fiscal Imbalance: A Sensitivity Analysis Application," Prague Economic Papers, Prague University of Economics and Business, vol. 2018(3), pages 331-350.
    5. Lucia Mihóková & Radovan Dráb & Andrea Kralik, 2019. "Determinants of Short-term Fiscal Imbalance: the Role of Tax Evasion as Fiscal Determinant Within European Countries," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 67(2), pages 515-534.

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    More about this item

    Keywords

    budget deficit; fiscal policy; economic growth.;
    All these keywords.

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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