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Fiscal Position and Size of Automatic Stabilizers in the CESEE EU Member States – Implications for Discretionary Measures

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  • Markus Eller

    () (Oesterreichische Nationalbank, Foreign Research Division)

Abstract

In the EU Member States in Central, Eastern and Southeastern Europe (CESEE-10), budgetary positions have been observed to react less strongly to GDP changes than in the euro area. In the observation period, automatic stabilizers mostly operated on the revenue side, while the response of government expenditure to GDP changes was quite inelastic. In most CESEE-10 countries, the government expenditure-to-GDP ratio is smaller than the euro area average. Thus, the automatic response of the budget balance to the present downturn is expected to be rather moderate. Moreover, the room for discretionary fiscal measures is limited as there are no sufficient buffers owing to the predominantly procyclical fiscal stance during past “boom times” in several countries and, currently, government debt markets in many countries are rather illiquid.

Suggested Citation

  • Markus Eller, 2009. "Fiscal Position and Size of Automatic Stabilizers in the CESEE EU Member States – Implications for Discretionary Measures," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 78-84.
  • Handle: RePEc:onb:oenbfi:y:2009:i:2:b:3
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    File URL: https://www.oenb.at/dam/jcr:843212ec-3b9c-4ac1-9624-d0e822893a01/feei_2009_q2_eller_tcm16-137028.pdf
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    Citations

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    Cited by:

    1. Milan Deskar Škrbić & Hrvoje Šimović, 2015. "The size and determinants of fiscal multipliers in Western Balkans: comparing Croatia, Slovenia and Serbia," EFZG Working Papers Series 1510, Faculty of Economics and Business, University of Zagreb.
    2. Peter Backé, 2009. "The Monetary Integration of CESEE EU Member States: Achievements and Prospects," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 5, pages 73-81.
    3. María Lorena Marí del Cristo & Marta Gómez-Puig, 2013. "“Fiscal sustainability and fiscal shocks in a dollarized and oil-exporting country: Ecuador”," IREA Working Papers 201306, University of Barcelona, Research Institute of Applied Economics, revised Apr 2013.
    4. Rilind Kabashi, 2014. "The Cyclical Character of Fiscal Policy in Transition Countries," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 57-73.
    5. Stanova, Nadja, 2015. "Fiscal discretion, growth and output volatility in new EU member countries," MPRA Paper 63946, University Library of Munich, Germany.
    6. Jesús Crespo Cuaresma & Markus Eller & Aaron Mehrotra, 2011. "The Economic Transmission of Fiscal Policy Shocks from Western to Eastern Europe," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 44-68.
    7. repec:taf:regstd:v:50:y:2016:i:11:p:1849-1862 is not listed on IDEAS
    8. John Lewis, 2013. "Fiscal policy in Central and Eastern Europe with real time data: cyclicality, inertia and the role of EU accession," Applied Economics, Taylor & Francis Journals, vol. 45(23), pages 3347-3359, August.
    9. Markus Eller & Jarmila Urvová, 2012. "How Sustainable Are Public Debt Levels in Emerging Europe?," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 48-79.
    10. repec:onb:oenbfi:y:2009:i:0:b:10 is not listed on IDEAS
    11. Markus Eller & Jarko Fidrmuc & Zuzana Fungáčová, 2016. "Fiscal Policy and Regional Output Volatility: Evidence from Russia," Regional Studies, Taylor & Francis Journals, vol. 50(11), pages 1849-1862, November.

    More about this item

    Keywords

    Automatic stabilizers; fiscal space; output gap; cyclicality of fiscal policy; discretionary fiscal policy;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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