The Roots of the Eurozone Sovereign Debt Crisis: PIGS vs Non-PIGS
The main purposes of this paper are twofold: a) to determine if there are significant differences on the determinants of public expenditures and tax revenues between the so-called PIGS and the remaining Eurozone member states; b) to uncover possible explanations for the different situations in which these countries find themselves nowadays. The paper focus on the effects of the cyclical state of the economy on those fiscal variables, and on the actual adherence to the fiscal rules imposed by the Maastricht Treaty. Based on the estimated results we conclude that the anti-cyclical reaction with respect to the unemployment rate is much stronger among non-PIGS. We also find that fiscal rules have, in general, not been followed by those two groups of countries. Moreover, PIGS, in spite of their economic frailties, have tried to emulate the fiscal behavior of their more prosperous Eurozone partners instead of executing more rigorous policies.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mark Hallerberg & Rolf Strauch, 2002. "On the Cyclicality of Public Finances in Europe," Empirica, Springer, vol. 29(3), pages 183-207, September.
- Rogoff, Kenneth, 1990.
"Equilibrium Political Budget Cycles,"
American Economic Review,
American Economic Association, vol. 80(1), pages 21-36, March.
- Hausman, Jerry A, 1978.
"Specification Tests in Econometrics,"
Econometric Society, vol. 46(6), pages 1251-71, November.
- Barro, Robert J, 1979.
"On the Determination of the Public Debt,"
Journal of Political Economy,
University of Chicago Press, vol. 87(5), pages 940-71, October.
- Alberto Alesina & Guido Tabellini, 1990.
"A Positive Theory of Fiscal Deficits and Government Debt,"
Review of Economic Studies,
Oxford University Press, vol. 57(3), pages 403-414.
- Tabellini, Guido & Alesina, Alberto, 1990. "A Positive Theory of Fiscal Deficits and Government Debt," Scholarly Articles 3612769, Harvard University Department of Economics.
- Hallerberg, Mark & Strauch, Rolf & von Hagen, Jurgen, 2007.
"The design of fiscal rules and forms of governance in European Union countries,"
European Journal of Political Economy,
Elsevier, vol. 23(2), pages 338-359, June.
- Hallerberg, Mark & Strauch, Rolf & von Hagen, Jürgen, 2004. "The design of fiscal rules and forms of governance in European Union countries," Working Paper Series 0419, European Central Bank.
- Hallerberg, Mark & Strauch, Rolf & Hagen, Jürgen von, 2006. "The design of fiscal rules and forms of governance in European Union countries," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 150, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Yianos Kontopoulos & Roberto Perotti, 1999. "Government Fragmentation and Fiscal Policy Outcomes: Evidence from OECD Countries," NBER Chapters, in: Fiscal Institutions and Fiscal Performance, pages 81-102 National Bureau of Economic Research, Inc.
- Susanne Lohmann, 1998. "Rationalizing the Political Business Cycle: A Workhorse Model," Economics and Politics, Wiley Blackwell, vol. 10(1), pages 1-17, 03.
- William D. Nordhaus, 1975. "The Political Business Cycle," Review of Economic Studies, Oxford University Press, vol. 42(2), pages 169-190.
- Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
- Talvi, Ernesto & Vegh, Carlos A., 2005. "Tax base variability and procyclical fiscal policy in developing countries," Journal of Development Economics, Elsevier, vol. 78(1), pages 156-190, October.
- Allan Drazen & Marcela Eslava, 2005. "Electoral Manipulation via Expenditure Composition: Theory and Evidence," NBER Working Papers 11085, National Bureau of Economic Research, Inc.
- Christina Schneider, 2010. "Fighting with one hand tied behind the back: political budget cycles in the West German states," Public Choice, Springer, vol. 142(1), pages 125-150, January.
When requesting a correction, please mention this item's handle: RePEc:voj:journl:v:58:y:2011:i:5:p:631-649. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ivana Horvat)
If references are entirely missing, you can add them using this form.