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Gauging by numbers: A first attempt to measure the quality of public finances in the EU

Author

Listed:
  • Salvador Barrios
  • Andrea Schaechter

Abstract

Ensuring high quality of public finances (QPF) with a view to supporting long-term economic growth has gained new urgency as the room for fiscal manoeuvre has shrunk in light of the current crisis. To more systematically analyse QPF and compare developments across countries and over time, a greater focus on identifying and developing comparable QPF indicators is needed. This paper provides a first attempt in this respect. Based on the view that QPF is a multi-dimensional concept, it creates composite indicators for twelve areas of public finances that are linked to long-term economic growth. While the proposed alternative calculation methods yield relatively robust results and findings are in line with conventional wisdom, due to data problems the composite indicators should only be seen as a useful starting point for identifying a country's main strengths and weaknesses in QPF. This would need to be complemented by qualitative analysis that also accounts for country and other specificities. JEL classification: E62, H11, H50, H52, H60

Suggested Citation

  • Salvador Barrios & Andrea Schaechter, 2009. "Gauging by numbers: A first attempt to measure the quality of public finances in the EU," European Economy - Economic Papers 2008 - 2015 382, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  • Handle: RePEc:euf:ecopap:0382
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    File URL: http://ec.europa.eu/economy_finance/publications/pages/publication15781_en.pdf
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    Cited by:

    1. World Bank, 2011. "Europe 2020," World Bank Other Operational Studies 27381, The World Bank.
    2. Hans Pitlik & Margit Schratzenstaller, 2011. "Growth Implications of Structure and Size of Public Sectors," WIFO Working Papers 404, WIFO.

    More about this item

    Keywords

    Quality of public finances; public finances; fiscal policy; long-term economic growth; public expenditure; public revenue; fiscal governance; Barrios; Schaechter;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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