Title
Discretion versus rule-based fiscal policy in new EU economies Discretion versus rule-based fiscal policy in new EU economies
Author
Faculty/Department
Faculty of Applied Economics
Publication type
report
Publication
Antwerp :UA, [*]
Subject
Economics
Source (series)
Research paper / University of Antwerp, Faculty of Applied Economics ; 2011:013
Volume/pages
24 p.,
Carrier
E
Target language
English (eng)
Affiliation
University of Antwerp
Abstract
This paper aims to evaluate fiscal policy as a macroeconomic stabilization tool in the new EU member countries using a vector autoregression (VAR) framework. The combined results of the analysis of impulse response functions and of the aggressiveness of fiscal discretion suggest that: 1. Shocks to government expenditures and revenues yield rather minor stimulating effects on output. 2. Periods with higher output growth tend to be linked with more loosened systematic policy levels. 3. There is evidence that higher output volatility is associated with the aggressive use of fiscal policy, whilst fiscal discretion does not seem to stimulate lasting output growth. Overall, this evidence together with the increased debt financing risks of these emerging economies favours the use of rules-based fiscal policy rather than (aggressive) fiscal discretion.
Full text (open access)
https://repository.uantwerpen.be/docman/irua/1986c1/8c15aac6.pdf
Handle