Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152856
Authors: 
Tujula, Mika
Wolswijk, Guido
Year of Publication: 
2004
Series/Report no.: 
ECB Working Paper 422
Abstract: 
Fiscal balances have deteriorated quickly in recent years, bringing back to the foreground the question what factors help explain such sharp changes. This paper takes a broad perspective at the issue regarding countries included, the range of explanatory variables tried, and the time-span. The empirical analysis shows that changes in budget balances are affected by debt growth, macroeconomic developments and political factors. In particular, we find that the run-up to EMU induced additional consolidation in Europe and that budget balances deteriorate markedly in election years. Asset prices also may affect budgets, but the impact remains limited in normal times.
Subjects: 
asset prices
budget balance
Economic Growth
Fiscal Policy
Stability and Growth Pact
JEL: 
E61
E62
H61
H62
Document Type: 
Working Paper

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