Fiscal Behaviour in the European Union: Rules, Fiscal Decentralization and Government Indebtedness

Afonso, António; Hauptmeier, Sebastian

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Fiscal Behaviour in the European Union: Rules, Fiscal Decentralization and Government Indebtedness

ECB Working Paper No. 1054

47 Pages Posted: 7 May 2009

See all articles by António Afonso

António Afonso

University of Lisbon - ISEG (School of Economics and Management); UECE (Research Unit on Complexity and Economics); ISEG Lisbon School of Economics and Management,Universidade de Lisboa

Sebastian Hauptmeier

European Central Bank (ECB) - Directorate General Economics

Date Written: May 7, 2009

Abstract

We assess the fiscal behaviour in the European Union countries for the period 1990-2005 via the responsiveness of budget balances to several determinants. The results show that the existence of effective fiscal rules, the degree of public spending decentralization, and the electoral cycle can impinge on the country’s fiscal position. Furthermore, the results also support the responsiveness of primary balances to government indebtedness.

Keywords: fiscal regimes, fiscal rules, fiscal decentralization, European Union, panel Data

JEL Classification: C23, E62, H62

Suggested Citation: Suggested Citation

Afonso, António and Hauptmeier, Sebastian, Fiscal Behaviour in the European Union: Rules, Fiscal Decentralization and Government Indebtedness (May 7, 2009). ECB Working Paper No. 1054, Available at SSRN: https://ssrn.com/abstract=1399284