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Elusive Counter-Cyclicality and Deliberate Opportunism? Fiscal Policy from Plans to Final Outcomes

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  • Álvaro M. Pina

Abstract

Drawing on the European Commission’s Autumn forecasts, I estimate fiscal reaction functions with four different information sets, ranging from budget plans to final outcomes. I also analyse deviations from plans during budget implementation. In a panel of 15 EU countries from 1987 to 2006, moving from plans to final data generally weakens the counter-cyclicality of budget balances and expenditures (though not of revenues), and reinforces electoral effects. Deviations from plans play a negligible role in the former finding, as they are often acyclical;but have a major role in the latter, as they display a clear opportunistic pattern.

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Bibliographic Info

Paper provided by Banco de Portugal, Economics and Research Department in its series Working Papers with number w200906.

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Date of creation: 2009
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Handle: RePEc:ptu:wpaper:w200906

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  1. Lawrence J. Christiano & Terry J. Fitzgerald, 1999. "The Band pass filter," Working Paper 9906, Federal Reserve Bank of Cleveland.
    • Lawrence J. Christiano & Terry J. Fitzgerald, 2003. "The Band Pass Filter," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 435-465, 05.
  2. Giovanni S. F. Bruno, 2005. "Estimation and inference in dynamic unbalanced panel-data models with a small number of individuals," Stata Journal, StataCorp LP, vol. 5(4), pages 473-500, December.
  3. Vincent Koen & Paul van den Noord, 2005. "Fiscal Gimmickry in Europe: One-Off Measures and Creative Accounting," OECD Economics Department Working Papers 417, OECD Publishing.
  4. Jacopo Cimadomo, 2007. "Fiscal Policy in Real Time," Working Papers 2007-10, CEPII research center.
  5. Lorenzo Forni & Sandro Momigliano, 2004. "Cyclical sensitivity of fiscal policies based on real-time data," Temi di discussione (Economic working papers) 540, Bank of Italy, Economic Research and International Relations Area.
  6. Beetsma, Roel & Giuliodori, Massimo, 2007. "On the Relationship between Fiscal Plans in the European Union: An Empirical Analysis Based on Real-Time Data," CEPR Discussion Papers 6088, C.E.P.R. Discussion Papers.
  7. Roel Beetsma & Massimo Giuliodori, 2010. "Fiscal adjustment to cyclical developments in the OECD: an empirical analysis based on real-time data," Oxford Economic Papers, Oxford University Press, vol. 62(3), pages 419-441, July.
  8. Golinelli, Roberto & Momigliano, Sandro, 2006. "Real-time determinants of fiscal policies in the euro area," Journal of Policy Modeling, Elsevier, vol. 28(9), pages 943-964, December.
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Cited by:
  1. Beetsma, Roel & Giuliodori, Massimo & Walschot, Mark & Wierts, Peter, 2010. "Fifty Years of Fiscal Planning and Implementation in the Netherlands," CEPR Discussion Papers 7969, C.E.P.R. Discussion Papers.
  2. Roel Beetsma & Benjamin Bluhm & Massimo Giuliodori & Peter Wierts, 2011. "From First-Release to Ex-Post Fiscal Data: Exploring the Sources of Revision Errors in the EU," Tinbergen Institute Discussion Papers 11-080/2, Tinbergen Institute.
  3. repec:dgr:uvatin:2011080 is not listed on IDEAS
  4. Paloviita, Maritta, 2012. "Fiscal planning and implementation: euro area analysis based on real time data," Research Discussion Papers 34/2012, Bank of Finland.
  5. Paloviita, Maritta, 2012. "Real time uncertainty in fiscal planning and debt accumulation in the euro area," Research Discussion Papers 35/2012, Bank of Finland.
  6. Jacopo Cimadomo, 2011. "Real-time data and fiscal policy analysis: a survey of the literature," Working Papers 11-25, Federal Reserve Bank of Philadelphia.
  7. Patricia Martins & Leonida Correia, 2013. "The determinants of macroeconomic forecasts and the Stability and Growth Pact," Working Papers Department of Economics 2013/07, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.

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