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Discretionary Fiscal Policies over the Cycle: New Evidence Based on the ESCB Disaggregated Approach

  • Luca Agnello

    (Banque de France)

  • Jacopo Cimadomo

    (European Central Bank)

This paper explores how discretionary fiscal policies on the revenue side of the government budget have reacted to economic fluctuations in European Union countries. For this purpose, it uses data on legislated revenue changes and structural indicators provided twice per year by national central banks of European Union countries in the ESCB framework for analyzing fiscal policy. Results suggest that, overall, legislated changes in taxes and social security contributions have responded in a strongly procyclical way to the business cycle, while commonly used cyclical-adjustment methods point to acyclicality.

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Article provided by International Journal of Central Banking in its journal International Journal of Central Banking.

Volume (Year): 8 (2012)
Issue (Month): 2 (June)
Pages: 43-85

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Handle: RePEc:ijc:ijcjou:y:2012:q:2:a:2
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