The Dynamic Behaviour of Budget Components and Output

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dc.contributor.author AFONSO, Antonio
dc.contributor.author CLAEYS, Peter
dc.date.accessioned 2011-04-19T12:46:29Z
dc.date.available 2011-04-19T12:46:29Z
dc.date.issued 2008
dc.identifier.citation Economic Modelling, 2008, 25, 1, 93-117
dc.identifier.issn 0264-9993
dc.identifier.uri http://hdl.handle.net/1814/16380
dc.description.abstract The main focus of this paper is the relation between the cyclical components of total revenues and expenditures and the budget balance in France, Germany, Portugal, and Spain. We try to uncover past trends behind the development of public finances that contribute to explaining the current stance of fiscal policy. The disaggregate analysis of fiscal policy in an SVAR that mixes long and short-term constraints allows us to look into the transmission channels of fiscal policy and to derive a model-based indicator of structural balance. The main conclusions are that fiscal slippages are mainly due to reversals in tax policies, which are unmatched by expenditure adjustments. As a consequence, deficits rise when economic conditions worsen but cause a 'ratcheting up' in the size of government in economic booms. The Stability and Growth Pact has not eradicated these procyclical policies. Bad policies in good times also contribute to aggregate macroeconomic instability. (c) 2007 Elsevier B.V. All rights reserved.
dc.language.iso en
dc.publisher Elsevier Science Bv
dc.subject fiscal indicator
dc.subject structural balance
dc.subject output gap
dc.subject SGP
dc.subject EMU
dc.subject SVAR
dc.subject short and long-term restrictions
dc.title The Dynamic Behaviour of Budget Components and Output
dc.type Article
dc.identifier.doi 10.1016/j.econmod.2007.04.016
dc.neeo.contributor AFONSO|Antonio|aut|
dc.neeo.contributor CLAEYS|Peter|aut|
dc.identifier.volume 25
dc.identifier.startpage 93
dc.identifier.endpage 117
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dc.identifier.issue 1


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