Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152901
Authors: 
Mehrotra, Aaron N.
Peltonen, Tuomas A.
Year of Publication: 
2005
Series/Report no.: 
ECB Working Paper 467
Abstract: 
This paper examines the link between socio-economic development and fiscal policy. We introduce an indicator for socio-economic development (SEDI) and investigate its relationship with different fiscal variables, using data for the cohesion countries, namely Greece, Portugal, Spain and Ireland for 1980-1999. We find that an improvement in the net lending position of the government, as well as a fall in the level of public debt, would be beneficial for socio-economic development in the medium term. Furthermore, fiscal consolidation is found to be more relevant for promoting socio-economic development in the cohesion countries than in the other EU-15 Member States. Our results provide support for incentives to curb spending, such as the fiscal criteria of the Maastricht Treaty or the Stability and Growth Pact.
Subjects: 
EU enlargement
fiscal consolidation
socio-economic development
Stability and Growth Pact
JEL: 
H6
H5
I0
Document Type: 
Working Paper

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