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Fiscal regimes in the EU


  • Afonso, António
  • Toffano, Priscilla


We assess the existence of fiscal regime shifts in the U.K., Germany, and Italy, using Markov switching fiscal rules. On the basis of a newly built quarterly data set, our results show the existence of fiscal regimes shifts, sometimes coupled with regime switches also regarding monetary developments. While in the UK “active” and “passive” (Leeper, 1991) fiscal regimes are somewhat clearer cut, in Germany fiscal regimes have been overall less active, supporting more fiscal sustainability. For Italy, a more passive fiscal behaviour is uncovered in the run-up to EMU. JEL Classification: C22, E62, H62

Suggested Citation

  • Afonso, António & Toffano, Priscilla, 2013. "Fiscal regimes in the EU," Working Paper Series 1529, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20131529

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    Cited by:

    1. repec:wly:ijfiec:v:22:y:2017:i:3:p:244-254 is not listed on IDEAS
    2. António Afonso & Christophe Rault, 2010. "What do we really know about fiscal sustainability in the EU? A panel data diagnostic," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(4), pages 731-755, January.
    3. António Afonso & Raquel Balhote, 2014. "Interactions between Monetary Policy and Fiscal Policy," Working Papers Department of Economics 2014/13, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    4. António Afonso & Christophe Rault, 2010. "What do we really know about fiscal sustainability in the EU? A panel data diagnostic," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(4), pages 731-755, January.
    5. Betty C. Daniel & Christos Shiamptanis, 2008. "Fiscal policy in the European Monetary Union," International Finance Discussion Papers 961, Board of Governors of the Federal Reserve System (U.S.).
    6. António Afonso & João Tovar Jalles, 2017. "Euro area time‐varying fiscal sustainability," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 22(3), pages 244-254, July.
    7. Afonso, António & Rault, Christophe, 2015. "Multi-step analysis of public finances sustainability," Economic Modelling, Elsevier, vol. 48(C), pages 199-209.
    8. Ricci-Risquete, Alejandro & Ramajo, Julián & de Castro, Francisco, 2016. "Do Spanish fiscal regimes follow the euro-area trends? Evidence from Markov-Switching fiscal rules," Economic Modelling, Elsevier, vol. 59(C), pages 484-494.

    More about this item


    EU; fiscal regimes; Markov-switiching;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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