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Fiscal Expectations Under the Stability and Growth Pact; Evidence from Survey Data

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  • Marcos Poplawski-Ribeiro
  • Jan-Christoph Rülke

Abstract

The paper uses survey data to analyze whether financial market expectations on government budget deficits changed in France, Germany, Italy, and the United Kingdom during the period of the Stability and Growth Pact (SGP). Our findings indicate that accuracy of financial expert deficit forecasts increased in France. Convergence between the European Commission's and market experts’ deficit forecasts also increased in France, Italy, and the United Kingdom, particularly during the period after SGP’s reform in 2005. Yet, convergence between markets’ forecasts and those of the French, German, and Italian national fiscal authorities seems not to have increased significantly during the SGP.

Suggested Citation

  • Marcos Poplawski-Ribeiro & Jan-Christoph Rülke, 2011. "Fiscal Expectations Under the Stability and Growth Pact; Evidence from Survey Data," IMF Working Papers 11/48, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:11/48
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    References listed on IDEAS

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    1. Xavier Debrun & David Hauner & Manmohan S. Kumar, 2009. "Independent Fiscal Agencies," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 44-81, February.
    2. Frederick van der Ploeg, 2007. "Prudent Budgetary Policy: Political Economy of Precautionary Taxation," Economics Working Papers ECO2007/39, European University Institute.
    3. Jacopo Cimadomo, 2012. "Fiscal Policy in Real Time," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(2), pages 440-465, June.
    4. Eric M. Leeper, 2009. "Anchoring fiscal expectations," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 72, pages 17-42, September.
    5. Manganelli, Simone & Wolswijk, Guido, 2007. "Market discipline, financial integration and fiscal rules: what drives spreads in the euro area government bond market?," Working Paper Series 745, European Central Bank.
    6. Lars Jonung & Martin Larch, 2006. "Improving fiscal policy in the EU: the case for independent forecasts," Economic Policy, CEPR;CES;MSH, vol. 21(47), pages 491-534, July.
    7. Reitz, Stefan & Stadtmann, Georg & Taylor, Mark P., 2010. "The effects of Japanese interventions on FX-forecast heterogeneity," Economics Letters, Elsevier, vol. 108(1), pages 62-64, July.
    8. Marcos Poplawski Ribeiro, 2009. "New Evidence on the Effectiveness of Europe's Fiscal Restrictions," Working Papers 2009-13, CEPII research center.
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    Citations

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    Cited by:

    1. Rülke, Jan-Christoph & Frenkel, Michael & Lis, Eliza, 2013. "Do budget balance rules anchor budget balance expectations? -- Some international evidence," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80050, Verein für Socialpolitik / German Economic Association.
    2. Cimadomo, Jacopo & Claeys, Peter & Poplawski-Ribeiro, Marcos, 2016. "How do experts forecast sovereign spreads?," European Economic Review, Elsevier, vol. 87(C), pages 216-235.
    3. Joao Tovar Jalles, 2015. "How Quickly is News Incorporated in Fiscal Forecasts?," Economics Bulletin, AccessEcon, vol. 35(4), pages 2802-2812.
    4. Lledó, Victor & Poplawski-Ribeiro, Marcos, 2013. "Fiscal Policy Implementation in Sub-Saharan Africa," World Development, Elsevier, vol. 46(C), pages 79-91.
    5. Laura Carabotta, 2014. "Which Agency and Which Period is The Best? Analyzing National and International Fiscal Forecasts in Italy," International Journal of Economic Sciences, University of Economics, Prague, vol. 2014(1), pages 27-46.
    6. Rülke, Jan-Christoph & Pierdzioch, Christian, 2014. "Government Forecasts of Budget Balances Under Asymmetric Loss: International Evidence," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100317, Verein für Socialpolitik / German Economic Association.
    7. Jeffrey A. Frankel & Jesse Schreger, 2016. "Bias in Official Fiscal Forecasts: Can Private Forecasts Help?," NBER Working Papers 22349, National Bureau of Economic Research, Inc.
    8. Roberto Tamborini, 2015. "Heterogeneous Market Beliefs, Fundamentals and the Sovereign Debt Crisis in the Eurozone," Economica, London School of Economics and Political Science, vol. 82, pages 1153-1176, December.
    9. Claeys, Peter & Cimadomo, Jacopo & Poplawski Ribeiro, Marcos, 2014. "How do financial institutions forecast sovereign spreads?," Working Paper Series 1750, European Central Bank.
    10. Jalles, João Tovar & Karibzhanov, Iskander & Loungani, Prakash, 2015. "Cross-country evidence on the quality of private sector fiscal forecasts," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 186-201.

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