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Fiscal cyclicality and EMU

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  • Bénétrix, Agustín S.
  • Lane, Philip R.

Abstract

For the set of EMU member countries, we examine cyclical patterns in fiscal outcomes. We find that there is significant time variation in fiscal cyclicality, with an improvement in the wake of the Maastricht Treaty but a deterioration after the creation of EMU. Furthermore, we show that the fiscal cycle is affected by the financial cycle in addition to the output cycle. The lessons for the current reforms of European economic and fiscal governance are manifest.

Suggested Citation

  • Bénétrix, Agustín S. & Lane, Philip R., 2013. "Fiscal cyclicality and EMU," Journal of International Money and Finance, Elsevier, vol. 34(C), pages 164-176.
  • Handle: RePEc:eee:jimfin:v:34:y:2013:i:c:p:164-176
    DOI: 10.1016/j.jimonfin.2012.11.009
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    More about this item

    Keywords

    Fiscal cyclicality; Maastricht Treaty; EMU; Financial cycle;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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