Empirical Evidencies for the Budget Deficits Co-Integration in the Old European Union Members: Are there any Interlinkages in Fiscal Policies?
AbstractIn the last years, the fiscal harmonization among the European Union members has become a pillar of economic integration and of fiscal and financial stability in the European area. The institutional changes, the semi-failure of the “old” Stability and Growth Pact as well as the recent waves of enlargements all these were put a greater emphasis on this issue inducing a higher pressure for fiscal discipline. In this context, the objective of the paper is to examines recent empirical evidences for bilateral and multilateral integration between fiscal policies, as this are synthesised by budget deficits, of old European Union members in the framework of the Johansen co-integration procedure with a preliminary appliance of the principal component analysis. The study finds that the dynamic of European fiscal policies takes place under the impact of some common driving forces which leads to a differentiate behaviour of two sub regional-groups individualized by the budget deficit series evolutionary patterns. Overall, it concludes that there could be find empirical evidences to support the thesis that a process of fiscal integration is currently running at least at the level of old European Union countries.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 12647.
Date of creation: 09 Jan 2009
Date of revision:
Fiscal policies in E.U.; budget deficits; co-integration; Johansen Test;
Find related papers by JEL classification:
- F15 - International Economics - - Trade - - - Economic Integration
- H00 - Public Economics - - General - - - General
- H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Anindya Banerjee & Josep Lluís Carrion-i-Silvestre, 2006.
"Cointegration in Panel Data with Breaks and Cross-Section Dependence,"
Economics Working Papers
ECO2006/5, European University Institute.
- Anindya Banerjee & Josep Lluis Carrion-i-Silvestre, 2011. "Cointegration in Panel Data with Breaks and Cross-section Dependence," Discussion Papers 11-25, Department of Economics, University of Birmingham.
- Banerjee, Anindya & Carrion-i-Silvestre, Josep Lluís, 2006. "Cointegration in panel data with breaks and cross-section dependence," Working Paper Series 0591, European Central Bank.
- António Afonso, 2005.
"Fiscal Sustainability: The Unpleasant European Case,"
FinanzArchiv: Public Finance Analysis,
Mohr Siebeck, Tübingen, vol. 61(1), pages 19-, March.
- Antonio Afonso, 2004. "Fiscal Sustainability: the Unpleasant European Case," Money Macro and Finance (MMF) Research Group Conference 2004 57, Money Macro and Finance Research Group.
- Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
- repec:fth:coluec:754 is not listed on IDEAS
- Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
- Gonzalo Fernández-de-Córdoba & José L. Torres, 2007.
"Fiscal harmonization in the presence of public inputs,"
07-02, Asociación Española de Economía y Finanzas Internacionales.
- Gonzalo Fernández de Córdoba & José L. Torres, 2007. "Fiscal Harmonization in the Presence of Public Inputs," Economic Working Papers at Centro de Estudios Andaluces E2007/08, Centro de Estudios Andaluces.
- Olivier Blanchard & Roberto Perotti, 1999.
"An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output,"
NBER Working Papers
7269, National Bureau of Economic Research, Inc.
- 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.
- Silika Prohl & Friedrich G. Schneider, 2006. "Sustainability of Public Debt and Budget Deficit: Panel cointegration analysis for the European Union Member countries," Economics working papers 2006-10, Department of Economics, Johannes Kepler University Linz, Austria.
- W. R. M. Perraudin & Thierry Pujol, 1990.
"European Fiscal Harmonization and the French Economy,"
IMF Working Papers
90/96, International Monetary Fund.
- W. R. M. Perraudin & T. Pujol, 1991. "European Fiscal Harmonization and the French Economy," IMF Staff Papers, Palgrave Macmillan, vol. 38(2), pages 399-440, June.
- Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
- Levine, Paul, 1993. "Fiscal Policy Co-ordination under EMU and the Choice of Monetary Instrument," The Manchester School of Economic & Social Studies, University of Manchester, vol. 61(0), pages 1-12, Suppl..
- Ioan Talpos & Alexandru Avram, 2013. "The Pro And Cons Of The New Treaty On Stability, Coordination And Governance In The Economic And Monetary Union," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 948-957, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.