Fiscal Politics in the Euro Area

45 Pages Posted: 23 Mar 2017

See all articles by Luc Eyraud

Luc Eyraud

International Monetary Fund (IMF)

Vitor Gaspar

European Commission

Tigran Poghosyan

International Monetary Fund (IMF)

Date Written: January 2017

Abstract

This paper provides evidence of fiscal procyclicality, excessive deficits, distorted budget composition and poor compliance with fiscal rules in the euro area. Our analysis relies on real-time data for 19 countries participating in the euro area over 1999-2015. We look for, but do not find, conclusive evidence of bias in procedures in relation to country size. The paper also briefly reviews the literature on political economy factors and policy biases, and offers some reflections on the euro area architecture.

Keywords: Political economy, Euro Area, Fiscal policy, Fiscal reforms, political economy factors, deficit bias, procyclicality, fiscal rules

Suggested Citation

Eyraud, Luc and Gaspar, Vitor and Poghosyan, Tigran, Fiscal Politics in the Euro Area (January 2017). IMF Working Paper No. 17/18, Available at SSRN: https://ssrn.com/abstract=2938319

Luc Eyraud (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Vitor Gaspar

European Commission ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49 69 1344 7200 (Phone)
+49 69 1344 6575 (Fax)

Tigran Poghosyan

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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