@techreport{vonHagen2004What,
abstract = {Fiscal rules, such as the excessive deficit procedure and the stability and
growth pact (SGP), aim at constraining government behavior. Milesi-Ferretti
(2003) develops a model in which governments circumvent such rules by
reverting to creative accounting. The amount of this creative accounting
depends on the reputation cost for the government and the economic cost of
sticking to the rule. In this paper, we provide empirical evidence of creative
accounting in the European Union. We find that the SGP rules have induced
governments to use stock-flow adjustments, a form of creative accounting, to
hide deficits. This tendency to substitute stock-flow adjustments for budget
deficits is especially strong for the cyclical component of the deficit, as in
times of recession the cost of reducing the deficit is particularly large.},
author = {J\"{u}rgen von Hagen and Guntram B. Wolff},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {H62; H70; H61; E62; H63; 330; Fiscal rules; stock-flow adjustments; debt-deficit adjustments; stability and growth pact; excessive deficit procedure; ESA 95; EU-Stabilit\"{a}tspakt; Finanzpolitik; Konvergenzkriterien; \"{O}ffentliche Finanzkontrolle; \"{O}ffentliches Rechnungswesen; \"{O}ffentliche Schulden; EU-Staaten},
language = {eng},
number = {2004,38},
title = {What do deficits tell us about debt? Empirical evidence on creative accounting with fiscal rules in the EU},
type = {Discussion paper Series 1 / Volkswirtschaftliches Forschungszentrum der Deutschen Bundesbank},
url = {http://hdl.handle.net/10419/19505},
year = {2004}
}
