Cyclical asymmetry in fiscal variables
In a stylised framework of fiscal policy determination that considers both structural targets and cyclical factors, we find significant cyclical asymmetry in the behaviour of fiscal variables in a sample of fourteen EU countries from 1970 to 2004, with budgetary balances (both overall and primary) deteriorating in contractions but not improving correspondingly in expansions. Analysis of budget components reveals that the asymmetry is due to expenditure, in particular transfers in cash. We find no evidence that the fiscal rules introduced in 1992 with the Treaty of Maastricht affected the cyclical behaviour of the variables examined. Numerical simulations show that cyclical asymmetry inflated average deficit levels, contributing significantly to the accumulation of debt.
|Date of creation:||Jun 2008|
|Contact details of provider:|| Postal: Via Nazionale, 91 - 00184 Roma|
Web page: http://www.bancaditalia.it
More information through EDIRC
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.:
- Fabrizio Balassone & Maura Francese, 2004.
"Cyclical asymmetry in fiscal policy, debt accumulation and the Treaty of Maastricht,"
Temi di discussione (Economic working papers)
531, Bank of Italy, Economic Research and International Relations Area.
- Fabrizio BALASSONE & Maura FRANCESE, "undated". "Cyclical Asymmetry in Fiscal Policy, Debt Accumulation and the Treaty of Maastricht," EcoMod2004 330600014, EcoMod.
- Zvi Hercowitz & Michel Strawczynski, 2004. "Cyclical Ratcheting in Government Spending: Evidence from the OECD," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 353-361, February.
- Michael Artis & Massimiliano Marcellino, "undated".
"Fiscal Solvency and Fiscal Forecasting in Europe,"
142, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Artis, Michael J & Marcellino, Massimiliano, 1998. "Fiscal Solvency and Fiscal Forecasting in Europe," CEPR Discussion Papers 1836, C.E.P.R. Discussion Papers.
- Artis, M. & Marcellino, M., 1998. "Fiscal Solvency and Fiscal Forecasting in Europe," Economics Working Papers eco98/2, European University Institute.
- Stephan Danninger & Annette J Kyobe & M. Cangiano, 2005. "The Political Economy of Revenue-Forecasting Experience From Low-Income Countries," IMF Working Papers 05/2, .
- Bouthevillain, Carine & Cour-Thimann, Philippine & van de Dool, Gerrit & Hernández de Cos, Pablo & Langenus, Geert & Mohr, Matthias & Momigliano, Sandro & Tujula, Mika, 2001.
"Cyclically adjusted budget balances: an alternative approach,"
Working Paper Series
0077, European Central Bank.
- Bouthevillain, C. & Van Den Dool, G. & Langenus, G. & Mohr, M. & Momigliano, S. & Tujula, M. & De Cos, P.H. & Cour-Thimann, Philippine, 2001. "Cyclically Adjusted Budget Balances: an Alternative Approach," Papers 77, Quebec a Montreal - Recherche en gestion.
- Athanasios Orphanides, 2001.
"Monetary Policy Rules Based on Real-Time Data,"
American Economic Review,
American Economic Association, vol. 91(4), pages 964-985, September.
- André Sapir & Marco Buti, 1998. "Economic policy in EMU," ULB Institutional Repository 2013/8078, ULB -- Universite Libre de Bruxelles.
- Graciela L. Kaminsky & Carmen M. Reinhart & Carlos A. Végh, 2005.
"When It Rains, It Pours: Procyclical Capital Flows and Macroeconomic Policies,"
in: NBER Macroeconomics Annual 2004, Volume 19, pages 11-82
National Bureau of Economic Research, Inc.
- Reinhart, Carmen & Kaminsky, Graciela & Vegh, Carlos, 2004. "When it rains, it pours: Procyclical capital flows and macroeconomic policies," MPRA Paper 13883, University Library of Munich, Germany.
- Graciela L. Kaminsky & Carmen M. Reinhart & Carlos A. Vegh, 2004. "When it Rains, it Pours: Procyclical Capital Flows and Macroeconomic Policies," NBER Working Papers 10780, National Bureau of Economic Research, Inc.
- Lichtenberg, Frank R & Griliches, Zvi, 1989.
"Errors of Measurement in Output Deflators,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 7(1), pages 1-9, January.
- Golinelli, Roberto & Momigliano, Sandro, 2006. "Real-time determinants of fiscal policies in the euro area," Journal of Policy Modeling, Elsevier, vol. 28(9), pages 943-964, December.
- Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-party System as a Repeated Game," Scholarly Articles 4552531, Harvard University Department of Economics.
- Fabrizio Balassone & Daniele Franco & Stefania Zotteri, 2007. "Rainy day funds: can they make a difference in Europe," Questioni di Economia e Finanza (Occasional Papers) 11, Bank of Italy, Economic Research and International Relations Area.
- Michael Gavin & Roberto Perotti, 1997. "Fiscal Policy in Latin America," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 11-72 National Bureau of Economic Research, Inc.
- Buti, Marco & Franco, Daniele & Ongena, Hedwig, 1998. "Fiscal Discipline and Flexibility in EMU: The Implementation of the Stability and Growth Pact," Oxford Review of Economic Policy, Oxford University Press, vol. 14(3), pages 81-97, Autumn.
- repec:ntj:journl:v:51:y:1998:i:n._4:p:715-32 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:bdi:wptemi:td_671_08. 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: ()
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.