Fiscal Politics in the Euro Area

By Luc Eyraud, Vitor Gaspar, Tigran Poghosyan

January 30, 2017

Preview Citation

Format: Chicago

Luc Eyraud, Vitor Gaspar, and Tigran Poghosyan. Fiscal Politics in the Euro Area, (USA: International Monetary Fund, 2017) accessed September 20, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper provides evidence of fiscal procyclicality, excessive deficits, distorted budget composition and poor compliance with fiscal rules in the euro area. Our analysis relies on real-time data for 19 countries participating in the euro area over 1999–2015. We look for, but do not find, conclusive evidence of bias in procedures in relation to country size. The paper also briefly reviews the literature on political economy factors and policy biases, and offers some reflections on the euro area architecture.

Subject: Fiscal governance, Fiscal policy, Fiscal rules, Fiscal stance, Political economy

Keywords: Country differentiation, Country size, Debt ratio, Deficit bias, Discretionary fiscal policy, Documents policy bias, EDP country, Europe, Financial crisis, Fiscal governance, Fiscal policy coordination, Fiscal rules, Fiscal stance, Global, Government yields of EA country, Output gap, Policy bias, Political economy factors, Potential GDP, Procyclicality, Reaction result, Sample of EA country, WP

Publication Details

Pages:

44
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2017/018
Stock No:

WPIEA2017018
ISBN:

9781475572919
ISSN:

1018-5941

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