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What Are Their Words Worth?: The Political Plans and Economic Pains of Fiscal Consolidations in the New EU Member States

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  • Jan Zápal
  • OndÅej Schneider

Abstract

This paper tracks the behavior of the fiscal authorities of the ten new EU member states in the period that immediately preceded their EU accession in 2004. We analyze the reasons that led to fiscal consolidations in the new members and present evidence from the preaccession economic and convergence programs of the ten inductees concerning the planed steps of the fiscal authorities and contrast them the subsequent experience. Throughout the paper, we identify two groups of countries that significantly differ in fiscal behavior. Our key finding concerning the behavior of the group of fiscally irresponsible countriesâfour central European countries and two Mediterranean statesâis that their current problems with high budget deficits originate in their lax approach and unwillingness to implement politically costly expenditure cuts, which is apparent in their repeated budget revisions and deferral of deficit reduction.

Suggested Citation

  • Jan Zápal & OndÅej Schneider, 2006. "What Are Their Words Worth?: The Political Plans and Economic Pains of Fiscal Consolidations in the New EU Member States," Eastern European Economics, Taylor & Francis Journals, vol. 44(5), pages 6-37, October.
    • Handle: RePEc:mes:eaeuec:v:44:y:2006:i:5:p:6-37
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    Cited by:

    1. Dybczak, Kamil & Melecky, Martin, 2014. "EU fiscal stance vulnerability: Are the old members the gold members?," Economic Modelling, Elsevier, vol. 38(C), pages 87-101.
    2. Heijdra, Ben J. & Ligthart, Jenny E., 2010. "The Transitional Dynamics Of Fiscal Policy In Small Open Economies," Macroeconomic Dynamics, Cambridge University Press, vol. 14(1), pages 1-28, February.
    3. Martin Gregor, 2008. "Rozpočtová pravidla a rozpočtový proces: Teorie, empirie a realita České republiky [Budgetary rules and budget process: Theory, empirics, and the case of the Czech Republic]," Politická ekonomie, Prague University of Economics and Business, vol. 2008(4), pages 484-504.

    More about this item

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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