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Has fiscal discretion during good times and bad times changed in the euro area countries?

Author

Listed:
  • Florence Huart

    (University Lille 1)

Abstract

We study the relationship between the change in the cyclically-adjusted primary balance (an indicator of discretionary fiscal policy) and the change in the output gap (an indicator of cyclical conditions). We use panel data for the euro area and data for 20 individual OECD countries, for the period 1970-2008. We show that countercyclical fiscal policy is less frequent in euro area countries than in other OECD countries. Since 1999, fiscal policies in the euro area have no longer been procyclical during good times, but they have been procyclical during bad times in two countries, Austria and Portugal.

Suggested Citation

  • Florence Huart, 2011. "Has fiscal discretion during good times and bad times changed in the euro area countries?," Economics Bulletin, AccessEcon, vol. 31(1), pages 404-415.
    • Handle: RePEc:ebl:ecbull:eb-10-00788
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    File URL: http://www.accessecon.com/Pubs/EB/2011/Volume31/EB-11-V31-I1-P39.pdf
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    References listed on IDEAS

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    1. Antonio Fatás & Ilian Mihov, 2010. "The Euro and Fiscal Policy," NBER Chapters, in: Europe and the Euro, pages 287-324, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Schalck, Christophe, 2012. "Investigating heterogeneity in European fiscal behaviours," Research in Economics, Elsevier, vol. 66(4), pages 383-390.

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    More about this item

    Keywords

    cyclical behaviour of fiscal policy; countercyclical fiscal stance; procyclical fiscal policy; discretion;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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