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Fiscal policy in Central and Eastern Europe with real time data: Cyclicality, inertia and the role of EU accession

This paper evaluates the cyclicality, inertia and effect of EU accession on fiscal policy in Central and Eastern Europe using a real time dataset. Budget balances are found to react in a stabilising way to economic activity, and they are less inert than is typically found in Western Europe. There is clear evidence of a fiscal loosening in the run-up to EU accession. This began in 1999 in larger central European countries, often identified as “front-runners. The other seven began loosening in 2001, after the Nice Treaty had been agreed and their EU entry confirmed. For both sets of countries, this loosening cumulatively amounts to some 3% of GDP.           
Year of publication:
2009-07
Authors: Lewis, John
Institutions: de Nederlandsche Bank
Subject: Central and Eastern Europe | Fiscal Policy | Real Time Data | EU Accession
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application/pdf
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Type of publication: Book / Working Paper
Language: English
Classification: E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation ; H6 - National Budget, Deficit, and Debt ; E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
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