Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/228222
Authors: 
Attinasi, Maria Grazia
Palazzo, Alessandra Anna
Pierluigi, Beatrice
Year of Publication: 
2019
Series/Report no.: 
ECB Working Paper No. 2344
Abstract: 
We review the determinants of the discretionary fiscal policy action of governments in the euro area and in other advanced economies during the past 20 years. This is done by estimating fiscal reaction functions using dynamic panel techniques and country-by-country estimates. The results suggest that, on average, discretionary fiscal policy did not deliver economic stabilisation: during good economic times (positive output gaps) it has been on average pro-cyclical both in the euro area and in the other regions. However, the loosening bias during good times has been countered by the presence of efficient public institutions, higher long term interest rates and higher debt-to-GDP ratios. Overall, as a result of various counterbalancing forces, fiscal activism has not been a major feature of policy making in the euro area, nor in other advanced economies during the past 20 years.
Subjects: 
fiscal stance
business cycle
government effectiveness
panel estimates
JEL: 
E62
H6
C23
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-3975-1
Document Type: 
Working Paper

Files in This Item:
File
Size
896.68 kB





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