Journal
OXFORD ECONOMIC PAPERS-NEW SERIES
Volume 62, Issue 3, Pages 419-441Publisher
OXFORD UNIV PRESS
DOI: 10.1093/oep/gpp039
Keywords
-
Categories
Ask authors/readers for more resources
Using real-time data, we explore the determinants of both fiscal plans and their implementation for OECD countries over the period 1995-2006. First, based on forecasts we estimate standard fiscal rules. Then, we explore how fiscal policy responds to new information, especially on the business cycle. There are marked differences in behaviour between the planning and implementation stages, as well as between the fiscal policy of EU countries and other OECD countries. Planned fiscal policy is a-cyclical for EU countries and counter-cyclical for the other countries. However, in the implementation stage, the EU countries react pro-cyclically to unexpected changes in the output gap, while the responses of the other OECD countries are a-cyclical. Hence, the empirical distinction between the two fiscal stages is crucial, while the relatively strong emphasis on ex ante, as opposed to ex post, compliance with fiscal rules (such as Europe's Stability and Convergence Programs) seems misguided.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available