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Fiscal policy in an enlarged EU

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  • Fabrizio Coricelli

Abstract

This paper analyzes the implications for acceding countries of the existing EU fiscal framework, focusing on three main issues. First, the 3% ceiling on the budget deficit does not leave sufficient room to acceding countries to run counter-cyclical policies during downturns. This is due to the much higher rate of potential output growth and volatility of rates of growth in acceding countries. Second, accession countries have much higher public investments-to-GDP ratios than current EU members. Therefore, current budgetary ceilings are much more stringent for acceding countries than for current EU members. Some form of ?golden rule? seems appropriate and consistent with the main goal of convergence and cohesion among EU countries. Third, the procedures associated to the implementation of EU fiscal rules are subject to political influence. As most acceding countries are small and relatively poor countries, they risk to become members of a ?second league? of the EU. JEL classifications: E62, E63, H50, H62, P35

Suggested Citation

  • Fabrizio Coricelli, 2004. "Fiscal policy in an enlarged EU," Revue de l'OFCE, Presses de Sciences-Po, vol. 91(5), pages 191-208.
    • Handle: RePEc:cai:reofsp:reof_075_0191
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    Citations

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    Cited by:

    1. Julia del Amo Valor & Marcos Martín Mateos & Diego Martínez López & Javier J. Pérez, 2023. "Is the European economic governance framework too “complex”? A critical discussion," Working Papers 2023-06, FEDEA.
    2. Filacek, Jan & Horvath, Roman & Skorepa, Michal, 2006. "Monetary Policy before Euro Adoption: Challenges for EU New Members," MPRA Paper 879, University Library of Munich, Germany.
    3. Arsic, Milojko & Nojkovic, Aleksandra & Randjelovic, Sasa, 2017. "Determinants of discretionary fiscal policy in Central and Eastern Europe," Economic Systems, Elsevier, vol. 41(3), pages 367-378.
    4. Juraj Antal & Jan Filáček & Jan Frait & Roman Horvath & Viktor Kotlán & Michal Skořepa, 2009. "Monetary Policy Strategies before Euro Adoption: The Art of Chasing Many Rabbits," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 3(2), pages 176-198, July.
    5. Rilind Kabashi, 2014. "The Cyclical Character of Fiscal Policy in Transition Countries," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 57-73.

    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • P35 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Public Finance

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