Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/212200
Authors: 
Paloviita, Maritta
Kinnunen, Helvi
Year of Publication: 
2011
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 21/2011
Abstract: 
Using real time data from the OECD and fiscal policy reaction functions, this study explores euro area fiscal policies since the late 1990s. Both iscretionary plans for the budget year and policy changes during budget implementation stages are investigated. The main focus is on the fiscal adjustment to the recent financial and economic crisis. The results suggest that during the monetary union (EMU) euro area planned fiscal policies have been long-term oriented and countercyclical. In the implementation stages new policy decisions have been made as a response to unexpected economics developments. We provide evidence that the crisis had a clear impact on discretionary policies. Due to the increased uncertainty, the crisis emphasized the impact of cyclical developments on fiscal planning. In the implementation stages, huge forecast errors made in budget planning were observed. As a consequence, new decisions were made in order to alleviate negative impacts of the crisis on the euro area economies.
JEL: 
E32
E62
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-780-1
Document Type: 
Working Paper

Files in This Item:
File
Size





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