Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/162276
Authors: 
Baldi, Guido
Staehr, Karsten
Year of Publication: 
2016
Citation: 
[Journal:] International Economics and Economic Policy [Publisher:] Springer [Place:] Berlin, Heidelberg [Year:] 2016 [Volume:] 13 [Issue:] 2 [Pages:] 297-317 [ISSN:] 1612-4812
Abstract: 
After the outbreak of the global financial crisis, some governments in the EU experienced serious fiscal problems, while others were less affected. This paper seeks to shed light on the divergent fiscal performance in the EU countries before and after the outbreak of the crisis. Fiscal reaction functions of the primary balance are estimated for different groups of EU countries using quarterly data for the pre-crisis period 2001-2008 and for the crisis period 2009-2014. The pre-crisis estimations reveal some differences in persistence and cyclical reaction between different groups of countries, but in most cases little feedback from the debt stock to the primary balance. The fiscal reaction functions of the countries that eventually developed fiscal problems do not stand out. The estimations on data from the crisis period show largely unchanged persistence and counter-cyclicality but much more feedback from the debt stock, and this applies both to the crisis countries and those less affected. In spite of large deficits and accumulation of debt, the underlying fiscal reaction has become more prudent after the outbreak of the European debt crisis.
Subjects: 
Fiscal reaction function
Global financial crisis
Debt crisis
Structural break
JEL: 
E61
E62
H62
H63
Published Version’s DOI: 
Additional Information: 
The final publication is available at Springer via http://dx.doi.org/10.1007/s10368-014-0309-4
Document Type: 
Article
Document Version: 
Accepted Manuscript (Postprint)

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.