Fiscal Regimes in the EU

Afonso, António; Toffano, Priscilla

doi:10.2139/ssrn.2257507

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Fiscal Regimes in the EU

ISEG Economics Working Paper No. 10/2013/DE/UECE

37 Pages Posted: 28 Apr 2013

See all articles by António Afonso

António Afonso

University of Lisbon - ISEG (School of Economics and Management); UECE (Research Unit on Complexity and Economics); ISEG Lisbon School of Economics and Management,Universidade de Lisboa; REM - Research in Economics and Mathematics

Priscilla Toffano

KU Leuven

There are 2 versions of this paper

Date Written: April 28, 2013

Abstract

We assess the existence of fiscal regime shifts in the U.K., Germany, and Italy, using Markov switching fiscal rules. On the basis of a newly built quarterly data set, our results show the existence of fiscal regimes shifts, sometimes coupled with regime switches also regarding monetary developments. While in the UK “active” and “passive” (Leeper, 1991) fiscal regimes are somewhat clearer cut, in Germany fiscal regimes have been overall less active, supporting more fiscal sustainability. For Italy, a more passive fiscal behaviour is uncovered in the run-up to EMU.

Keywords: Fiscal regimes, Markov-switiching, EU

JEL Classification: C22, E62, H62

Suggested Citation: Suggested Citation

Afonso, António and Toffano, Priscilla, Fiscal Regimes in the EU (April 28, 2013). ISEG Economics Working Paper No. 10/2013/DE/UECE, Available at SSRN: https://ssrn.com/abstract=2257507 or http://dx.doi.org/10.2139/ssrn.2257507