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EuropeÕs Deficit Free Riders: A Panel Data Analysis

Author

Listed:
  • Thierry Warin
  • Lindsay Wolff

    (Department of Economics, Middlebury College, Vermont)

Abstract

The paper proposes an empirical method to measure the free riding possibility of public deficits in Europe. We use a cross-sectional time-series analysis of differences in national public deficits since 1991, and we compare the evolution of deficits before and after the inception of the euro in 1999. Evidence is that the countries breaching the Stability and Growth Pact are not likely free riders, but rather leaders in terms of deficits. In this case, they may lead the march towards higher public deficits in Europe.

Suggested Citation

  • Thierry Warin & Lindsay Wolff, 2005. "EuropeÕs Deficit Free Riders: A Panel Data Analysis," European Political Economy Review, European Political Economy Infrastructure Consortium, vol. 3(Spring), pages 5-17.
  • Handle: RePEc:epe:journl:v:3:y:2005:i:spring:p:5-17
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    File URL: http://www.ugbs.org/weru/eper/vol3/no1/warin-wolff.pdf
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    Cited by:

    1. Thierry Warin, 2005. "Stability and Growth Pact: An Index to Trigger an Early Warning Earlier?," Middlebury College Working Paper Series 0502, Middlebury College, Department of Economics.
    2. Thierry Warin & Kenneth Donahue, 2006. "The Stability and Growth Pact: A European Answer to the Political Budget Cycle?," Middlebury College Working Paper Series 0606, Middlebury College, Department of Economics.

    More about this item

    Keywords

    Europe; Fiscal rule; Stability and Growth Pact;

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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