Has the stability and growth pact impeded political budget cycles in the European Union?

Please use this identifier to cite or link to this item: http://dspace.mediu.edu.my:8181/xmlui/handle/10419/18996

Title:	Has the stability and growth pact impeded political budget cycles in the European Union?
Keywords:	D78 E62 D72 ddc:330 fiscal policy political budget cycle Stability and Growth Pact Finanzpolitik Politischer Konjunkturzyklus EU-Stabilitätspakt Moral Hazard Schätzung Europäische Wirtschafts- und Währungsunion EU-Staaten
Issue Date:	16-Oct-2013
Publisher:
Description:	This paper examines whether there is a political budget cycle (PBC) in countries in the euro area. Using a multivariate model for the period 1999-2004 and various election indicators we find strong evidence that the Stability and Growth Pact has not restricted fiscal policy makers in the euro area in pursuing expansionary policies before elections. In an election-year – but not in the year prior to the election – the budget deficit increases. This result is in line with third generation PBC models, which are based on moral hazard. We also find a significant but small partisan effect on fiscal policy outcomes.
URI:	http://koha.mediu.edu.my:8181/xmlui/handle/10419/18996
Other Identifiers:	http://hdl.handle.net/10419/18996 ppn:500839859
Appears in Collections:	EconStor

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