Spend-and-Tax: A Panel Data Investigation for the EU
Economics Bulletin, Vol. 29, No. 4, pp. 2545-2551, 2009
Posted: 25 Oct 2009
There are 2 versions of this paper
Spend-and-Tax: A Panel Data Investigation for the EU
Date Written: October 12, 2009
Abstract
Using bootstrap panel analysis, allowing for cross-country correlation, without the need of pre-testing for unit roots, we study the causality between government spending and revenue for the EU in the period 1960-2006. We find spend-and-tax causality for Italy, France, Spain, Greece, and Portugal, while tax-and-spend evidence is present for Germany, Belgium, Austria Finland and the UK, and for several EU New Member States. Moreover, in the run-up to EMU there was some shifting away from a spend-and-tax strategy, implying adjustments of fiscal behaviour.
Keywords: panel causality, fiscal policy, EU
JEL Classification: C23, E62, H62.
Suggested Citation: Suggested Citation