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Fiscal Cyclicality and EMU

  • Agustín S. Bénétrix

    ()

    (IIIS, Trinity College Dublin)

  • Philip R. Lane

    ()

    (IIIS, Trinity College Dublin and CEPR)

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.

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Paper provided by IIIS in its series The Institute for International Integration Studies Discussion Paper Series with number iiisdp403.

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Length: 29 pages
Date of creation: Jul 2012
Date of revision:
Handle: RePEc:iis:dispap:iiisdp403
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