Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153700
Authors: 
Hauptmeier, Sebastian
Sanchez Fuentes, Jesus
Schuknecht, Ludger
Year of Publication: 
2010
Series/Report no.: 
ECB Working Paper 1266
Abstract: 
The study looks at primary expenditure developments in the euro area, its three largest members and four “macro-imbalances” countries for the period 1999-2009. It compares actual expenditure trends with those that would have prevailed if countries had followed neutral policies based on expenditure rules since the start of EMU. It also calculates the implications for debt trends. It finds that, all sample countries except Germany applied expansionary expenditure policies. This resulted in much higher expenditure and debt paths compared to a counterfactual neutral expenditure stance. Simple and prudent rules-based spending policies could have led to much safer fiscal positions much more in line with the EU’s Stability and Growth Pact rules.
Subjects: 
Expenditure policies
expenditure rules
fiscal stance
public debt
sustainability
JEL: 
E17
E61
E65
H50
H60
Document Type: 
Working Paper

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