Expansionary Fiscal Consolidations in Europe – New Evidence

24 Pages Posted: 14 Feb 2012

See all articles by Antonio Afonso

Antonio Afonso

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

Date Written: March 29, 2007

Abstract

In order to assess the existence of expansionary fiscal consolidations in Europe, panel data models for private consumption are estimated for the EU15 countries, using annual data over the period 1970–2005. Three alternative approaches to determine fiscal episodes are used, and the level of government indebtedness is also taken into account. The results show some evidence in favor of the existence of expansionary fiscal consolidations, for several budgetary spending items (general government final consumption, social transfers, and taxes), depending on the specification and on the time span used. On the other hand, the possibility of asymmetric effects of fiscal episodes does not seem to be corroborated by the results.

Keywords: fiscal policy, expansionary fiscal consolidations, panel data models, European Union

JEL Classification: C23, E21, E62

Suggested Citation

Afonso, Antonio, Expansionary Fiscal Consolidations in Europe – New Evidence (March 29, 2007). Available at SSRN: https://ssrn.com/abstract=2004360 or http://dx.doi.org/10.2139/ssrn.2004360

Antonio Afonso (Contact Author)

University of Lisbon - ISEG (School of Economics and Management) ( email )

R. Miguel Lupi, 20
Lisbon, 1248-078
Portugal
+351 21 392 5985 (Phone)
+351 21 396 6407 (Fax)

HOME PAGE: http://https://www.iseg.ulisboa.pt/aquila/homepage/aafonso

UECE (Research Unit on Complexity and Economics)

Rua Miguel Lupi 20
Lisbon, 1249-078
Portugal
+351-213 925 912 (Phone)
+351-213 971 196 (Fax)

HOME PAGE: http://https://uece.rc.iseg.ulisboa.pt/

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