Research Discussion Papers, Bank of Finland
Sensitivity of fiscal-policy effects to policy coordination and business cycle conditions
Abstract: This paper deals with the problems of assessing the
effects of fiscal policy in the European Monetary Union. Here, we face wide
cross-country differences in key fiscal parameters, some of which may also
be vary over time (business cycle). Moreover, these effects may also depend
on trade spillover effects and thus on the extent of policy coordination.
Our empirical analyses make use of data for 15 EU countries, mainly for the
period 1970-2011. The results clearly indicate that fiscal multipliers are
not constant across countries and time, being much larger during economic
recessions. By contrast, the policy coordination-effects appear to be more
homogenous, although it turns out that small countries may benefit more
Keywords: fiscal policy; policy coordination; government deficit; EMU; (follow links to similar papers)
JEL-Codes: E61; E63; H62; (follow links to similar papers)
21 pages, June 24, 2013
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- This paper is forthcoming as:
Viren, Matti, 'Sensitivity of fiscal-policy effects to policy coordination and business cycle conditions', International Economics and Economic Policy.
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