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Fiscal Regime Shifts in Portugal

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  • António Afonso

    ()
    (European Central Bank, Directorate General Economics, ISEG-UTL, UECE)

  • Peter Claeys

    ()
    (Universitat de Barcelona)

  • Ricardo M. Sousa

    ()
    (Universidade do Minho - NIPE)

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 NIPE - Universidade do Minho in its series NIPE Working Papers with number 25/2009.

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Date of creation: 2009
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Handle: RePEc:nip:nipewp:25/2009

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Postal: Núcleo de Investigação em Políticas Económicas, Escola de Economia e Gestão, Universidade do Minho, P-4710-057 Braga, Portugal
Phone: +351-253604510 ext 5532
Fax: +351-253601380
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Web page: http://www3.eeg.uminho.pt/economia/nipe/versao_inglesa/index_uk.htm
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Keywords: fiscal regimes; Markov Switching; Portugal.;

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