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Fiscal policies and business cycles in an enlarged euro area

  • Karsten Staehr


This paper compares the cyclical properties of fiscal policies across the 12 original eurozone countries and the future members from Central and Eastern Europe. For the sample period 1995-2005, the fiscal balance exhibits less inertia and is more counter-cyclical in Central and Eastern European countries than in members of the eurozone. The main differences arise from the revenue side. Differences in the formation of fiscal policy between current and future eurozone countries decrease over time. Autonomous fiscal policy has little or no effect on cyclical variability in either of the two groups of countries. Counter-cyclical fiscal policy appears to be effective in Central and Eastern European countries, but largely ineffective in eurozone countries

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Paper provided by Bank of Estonia in its series Bank of Estonia Working Papers with number 2007-03.

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Length: 37 pg.
Date of creation: 08 Mar 2007
Date of revision: 08 Mar 2007
Handle: RePEc:eea:boewps:wp2007-03
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