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Fiscal Consolidation in Europe: Pre- and Post-Maastricht

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  • Christophe Kamps

Abstract

Based on a panel data model this paper investigates whether the effects of fiscal policy on national saving in Europe have changed after the Maastricht Treaty came into force. Recently Giavazzi, Jappelli and Pagano (2000) found evidence that national saving responds nonlinearly to fiscal policy when a large and persistent consolidation is undertaken. I show that their finding is not robust, one reason being that the structural budget deficit is not a time-invariant criterion for identifying episodes of large and persistent fiscal impulses. This paper proposes and analyses an alternative definition of a fiscal consolidation episode: the post-Maastricht period.

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File URL: https://www.econstor.eu/dspace/bitstream/10419/17737/1/kap1028.pdf
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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1028.

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Length: 24 pages
Date of creation: Feb 2001
Date of revision:
Handle: RePEc:kie:kieliw:1028

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Related research

Keywords: Fiscal policy; national saving; budgetary consolidation; European Union; panel;

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References

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  1. Douglas W. Elmendorf & N. Gregory Mankiw, 1998. "Government debt," Finance and Economics Discussion Series 1998-09, Board of Governors of the Federal Reserve System (U.S.).
    • Elmendorf, Douglas W. & Gregory Mankiw, N., 1999. "Government debt," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 25, pages 1615-1669 Elsevier.
  2. Preston J. Miller & William Roberds, 1992. "How little we know about deficit policy effects," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 2-11.
  3. Olivier Blanchard & Roberto Perotti, 2002. "An Empirical Characterization Of The Dynamic Effects Of Changes In Government Spending And Taxes On Output," The Quarterly Journal of Economics, MIT Press, vol. 117(4), pages 1329-1368, November.
  4. Fatás, Antonio & Mihov, Ilian, 2001. "The Effects of Fiscal Policy on Consumption and Employment: Theory and Evidence," CEPR Discussion Papers 2760, C.E.P.R. Discussion Papers.
  5. Mountford, A.W. & Uhlig, H.F.H.V.S., 2002. "What are the Effects of Fiscal Policy Shocks?," Discussion Paper 2002-31, Tilburg University, Center for Economic Research.
  6. Barro, Robert J, 1989. "The Ricardian Approach to Budget Deficits," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 37-54, Spring.
  7. Heylen, Freddy & Everaert, Gerdie, 2000. " Success and Failure of Fiscal Consolidation in the OECD: A Multivariate Analysis," Public Choice, Springer, vol. 105(1-2), pages 103-24, October.
  8. Francesco Giavazzi & Marco Pagano, 1990. "Can Severe Fiscal Contractions Be Expansionary? Tales of Two Small European Countries," NBER Chapters, in: NBER Macroeconomics Annual 1990, Volume 5, pages 75-122 National Bureau of Economic Research, Inc.
  9. Giavazzi, Francesco & Jappelli, Tullio & Pagano, Marco, 2000. "Searching for Non-Linear Effects of Fiscal Policy: Evidence from Industrial and Developing Countries," CEPR Discussion Papers 2374, C.E.P.R. Discussion Papers.
  10. Bernheim, B Douglas, 1989. "A Neoclassical Perspective on Budget Deficits," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 55-72, Spring.
  11. Eisner, Robert, 1989. "Budget Deficits: Rhetoric and Reality," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 73-93, Spring.
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Citations

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Cited by:
  1. Julia Darby & V. Anton Muscatelli & Graeme Roy, 2004. "Fiscal Consolidation And Decentralisation: A Tale Of Two Tiers," Working Papers 2004_2, Business School - Economics, University of Glasgow.
  2. Mourao, Paulo & Rodrigues, Carlos, 2007. "Abordagens da despesa pública nos últimos vinte anos
    [Twenty years of Perspectives on Public Expenditures]
    ," MPRA Paper 3416, University Library of Munich, Germany.
  3. Christophe Kamps, 2006. "Are the effects of fiscal policy really nonlinear? A note," Empirica, Springer, vol. 33(2), pages 113-125, June.
  4. Bertocco Giancarlo & Fanelli Luca & Paruolo Paolo, 2002. "On the determinants of inflation in Italy: evidence of cost-push effects before the European Monetary Union," Economics and Quantitative Methods qf0223, Department of Economics, University of Insubria.
  5. Jérôme Creel & Bruno Ducoudré & Catherine Mathieu & Henri Sterdyniak, 2005. "Doit-on oublier la politique budgétaire ?. Une analyse critique de la nouvelle théorie anti-keynésienne des finances publiques," Revue de l'OFCE, Presses de Sciences-Po, vol. 92(1), pages 43-97.
  6. Gern, Klaus-Jürgen & Kamps, Christophe & Scheide, Joachim, 2002. "Euroland: der Aufschwung beginnt," Open Access Publications from Kiel Institute for the World Economy 2745, Kiel Institute for the World Economy (IfW).
  7. repec:spo:wpecon:info:hdl:2441/1769 is not listed on IDEAS

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