Fiscal Policies and Business Cycles in an Enlarged Euro Area

Posted: 14 Mar 2008

See all articles by Karsten Staehr

Karsten Staehr

Tallinn University of Technology (TUT) - Department of Finance and Economics; Bank of Estonia

Abstract

This paper compares the cyclical properties of fiscal policies across the 12 original eurozone countries and the future members from Central and Eastern Europe. For the sample period 1995-2005, the fiscal balance exhibits less inertia and is more counter-cyclical in Central and Eastern European countries than in members of the eurozone. The main differences arise from the revenue side. Differences in the formation of fiscal policy between current and future eurozone countries decrease over time. Both autonomous and counter-cyclical fiscal policies have little or no effect on cyclical variability in the eurozone countries, while such policies appear to be effective in Central and Eastern European countries.

Keywords: Fiscal policy determinants, Fiscal policy effects, Eurozone expansion

JEL Classification: E62, E63, E32

Suggested Citation

Staehr, Karsten, Fiscal Policies and Business Cycles in an Enlarged Euro Area. Economic Systems, Vol. 32, No. 1, 2008, Available at SSRN: https://ssrn.com/abstract=1105671

Karsten Staehr (Contact Author)

Tallinn University of Technology (TUT) - Department of Finance and Economics ( email )

Akadeemia tee 3-486
Tallinn, 12618
Estonia

HOME PAGE: http://www.ttu.ee/karsten-staehr

Bank of Estonia ( email )

Estonia Building 13
Tallinn, 15095
Estonia

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