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Fiscal Cyclicality and EMU

Author

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  • Agustín S. Bénétrix

    (IIIS, Trinity College Dublin)

  • Philip R. Lane

    (IIIS, Trinity College Dublin and CEPR)

Abstract

For the set of EMU member countries, we examine cyclical patterns in fiscal outcomes. We find that there is significant time variation in fiscal cyclicality, with an improvement in the wake of the Maastricht Treaty but a deterioration after the creation of EMU. Furthermore, we show that the fiscal cycle is affected by the financial cycle in addition to the output cycle. The lessons for the current reforms of European economic and fiscal governance are manifest.

Suggested Citation

  • Agustín S. Bénétrix & Philip R. Lane, 2012. "Fiscal Cyclicality and EMU," The Institute for International Integration Studies Discussion Paper Series iiisdp403, IIIS.
    • Handle: RePEc:iis:dispap:iiisdp403
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    More about this item

    Keywords

    Cyclicality; EMU;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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