The Impact Of The European Union Fiscal Rules On Economic Growth
This study intends to provide an empirical answer to the question of whether Maastricht and SGP fiscal rules have affected growth of European Union countries. A growth equation augmented with fiscal variables and controlling for the period in which fiscal rules were implemented in Europe is estimated over a panel of 15 EU countries (and 8 OECD countries) for the period 1970-2005 with the purpose of answering this question. The equation is estimated using both a dynamic fixed effects estimator and a recently developed pooled mean group estimator. GMM estimators are also used in a robustness analysis. Empirical results show that growth of real GDP per capita in the EU was not negatively affected in the period after Maastricht. This is the case when the recent performance of EU countries is compared both with their past performance and with the performance of other developed countries. Results even show that growth is slightly higher in the period in which the fulfilment of the 3% criteria for the deficit started to be officially assessed. Therefore, this study concludes that the institutional changes that occurred in Europe after 1992, especially the implementation of Maastricht and Stability and Growth Pact fiscal rules, should not be blamed for being harmful to growth in Europe.
|Date of creation:||2007|
|Contact details of provider:|| Postal: CV4 7AL COVENTRY|
Phone: +44 (0) 2476 523202
Fax: +44 (0) 2476 523032
Web page: http://www2.warwick.ac.uk/fac/soc/economics/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Roberto Cellini, 1997. "Growth empirics: evidence from a panel of annual data," Applied Economics Letters, Taylor & Francis Journals, vol. 4(6), pages 347-351.
- Angel de la Fuente & Rafael Donénech, 2000.
"Human Capital in Growth Regressions: How much Difference Does Data Quality Make?,"
OECD Economics Department Working Papers
262, OECD Publishing.
- Angel de la Fuente & Rafael Doménech, 2006. "Human Capital in Growth Regressions: How Much Difference Does Data Quality Make?," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 1-36, 03.
- de la Fuente, Angel & Doménech, Rafael, 2000. "Human Capital In Growth Regressions: How Much Difference Does Data Quality Make?," CEPR Discussion Papers 2466, C.E.P.R. Discussion Papers.
- ?gel de la Fuente & Rafael Dom?ech, "undated". "Human Capital In Growth Regressions: How Much Difference Does Data Quality Make?," UFAE and IAE Working Papers 446.00, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 1127-1170.
- Pasaran, M.H. & Im, K.S. & Shin, Y., 1995.
"Testing for Unit Roots in Heterogeneous Panels,"
Cambridge Working Papers in Economics
9526, Faculty of Economics, University of Cambridge.
- Bond, Stephen Roy & Hoeffler, Anke & Temple, Jonathan, 2001.
"GMM Estimation of Empirical Growth Models,"
CEPR Discussion Papers
3048, C.E.P.R. Discussion Papers.
- Castro, Vitor, 2011.
"The impact of the European Union fiscal rules on economic growth,"
Journal of Macroeconomics,
Elsevier, vol. 33(2), pages 313-326, June.
- Castro, Vítor, 2007. "The Impact Of The European Union Fiscal Rules On Economic Growth," The Warwick Economics Research Paper Series (TWERPS) 794, University of Warwick, Department of Economics.
- Vítor Castro, 2007. "The Impact of the European Union Fiscal Rules on Economic Growth," NIPE Working Papers 10/2007, NIPE - Universidade do Minho.
- Artis, Michael J & Onorante, Luca, 2006.
"The Economic Importance of Fiscal Rules,"
CEPR Discussion Papers
5684, C.E.P.R. Discussion Papers.
- N. Gregory Mankiw & David Romer & David N. Weil, 1990.
"A Contribution to the Empirics of Economic Growth,"
NBER Working Papers
3541, National Bureau of Economic Research, Inc.
- Andrea Bassanini & Stefano Scarpetta, 2001.
"The Driving Forces of Economic Growth: Panel Data Evidence for the OECD Countries,"
- Andrea Bassanini & Stefano Scarpetta, 2003. "The Driving Forces of Economic Growth: Panel Data Evidence for the OECD Countries," OECD Economic Studies, OECD Publishing, vol. 2001(2), pages 9-56.
- Galí, Jordi & Perotti, Roberto, 2003.
"Fiscal Policy and Monetary Integration in Europe,"
CEPR Discussion Papers
3933, C.E.P.R. Discussion Papers.
- Peter Pedroni, 1999.
"Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors,"
Department of Economics Working Papers
2000-02, Department of Economics, Williams College.
- Pedroni, Peter, 1999. " Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-670, Special I.
- repec:kap:iaecre:v:11:y:2005:i:1:p:29-38 is not listed on IDEAS
- Philip Arestis & Kevin McCauley & Malcolm Sawyer, 2000.
"An Alternative Stability Pact for the European Union,"
- Arestis, Philip & McCauley, Kevin & Sawyer, Malcolm, 2001. "An Alternative Stability Pact for the European Union," Cambridge Journal of Economics, Oxford University Press, vol. 25(1), pages 113-130, January.
- Philip Arestis & Kevin McCauley & Malcolm Sawyer, 2000. "An Alternative Stability Pact for the European Union," Economics Working Paper Archive wp_296, Levy Economics Institute.
- Soukiazis, Elias & Castro, Vitor, 2005. "How the Maastricht criteria and the Stability and Growth Pact affected real convergence in the European Union: A panel data analysis," Journal of Policy Modeling, Elsevier, vol. 27(3), pages 385-399, April.
- Sjef Ederveen & Henri L . F. Groot & Richard Nahuis, 2006.
"Fertile Soil for Structural Funds?A Panel Data Analysis of the Conditional Effectiveness of European Cohesion Policy,"
Wiley Blackwell, vol. 59(1), pages 17-42, 02.
- Sjef Ederveen & Henri de Groot & Richard Nahuis, 2002. "Fertile soil for structural funds? A panel data analysis of the conditional effectiveness of European cohesion policy," CPB Discussion Paper 10, CPB Netherlands Bureau for Economic Policy Analysis.
- S. Ederveen & H.L.F. de Groot & R. Nahuis, 2003. "Fertile Soil for Structural Funds? A panel data analysis of the conditional effectiveness of European cohesion policy," Working Papers 03-14, Utrecht School of Economics.
- Charles Wyplosz, 2006. "European Monetary Union: the dark sides of a major success," Economic Policy, CEPR;CES;MSH, vol. 21(46), pages 207-261, 04.
- Hein, Eckhard & Truger, Achim, 2005. "European Monetary Union: nominal convergence, real divergence and slow growth?," Structural Change and Economic Dynamics, Elsevier, vol. 16(1), pages 7-33, March.
- Jordi Galí & Roberto Perotti, 2003. "Fiscal policy and monetary integration in Europe," Economic Policy, CEPR;CES;MSH, vol. 18(37), pages 533-572, October.
- Valila, Timo & Mehrotra, Aaron, 2005. "Evolution And Determinants Of Public Investment In Europe," Economic and Financial Reports 2005/1, European Investment Bank, Economics Department.
- Blanchard, Olivier J & Giavazzi, Francesco, 2004. "Improving the SGP Through a Proper Accounting of Public Investment," CEPR Discussion Papers 4220, C.E.P.R. Discussion Papers.
- von Hagen, Jürgen, 2003. "Fiscal discipline and growth in Euroland: Experiences with the stability and growth pact," ZEI Working Papers B 06-2003, University of Bonn, ZEI - Center for European Integration Studies.
When requesting a correction, please mention this item's handle: RePEc:wrk:warwec:794. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Margaret Nash)
If references are entirely missing, you can add them using this form.