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Title:Economic, political and institutional determinants of budget deficits in the European Union PDF Logo
Authors:Bayar, Ali
Smeets, Bram
Issue Date:2009
Series/Report no.:CESifo working paper 2611
Abstract:Using an extended data set of EU countries ranging from 1971-2006 and relevant econometric methods, we investigate the economic, political, and institutional determinants of government deficits in the EU. The results show a strong opportunistic behaviour of policymakers which leads to political business cycles. We find that political fragmentation does not play a significant role in government deficits. Partisan behaviour has a weak effect. The stability of the government has a significant negative impact on the size of the budget deficit. The paper also shows the significant effects of the Maastricht Treaty on fiscal consolidation.
Subjects:fiscal policy
European Monetary Union
JEL:C33
E62
H6
H87
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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