Kiel Working Papers, Kiel Institute for World Economics
No 1098:
European Fiscal Policies Under the Stability Pact ; Some First Insights
Harmen Lehment
Abstract: EU Member countries have shown different degrees of
ambition to reach a budget position of “close to balance or in surplus”.
Differences in ambition can only partly be explained by the relative size
of cyclical safety margins or differences in the number of votes in the
ECOFIN Council. It is also shown that in the medium run there is no
evidence for a trade-off between budget consolidation and growth. Of the
eight countries with the strongest reduction of structural budget deficits
in the period 1992-2001, only one showed growth rates below the EU average.
The other seven countries even managed to achieve higher growth rates than
in the period 1974-91 during which structural deficits had increased.
Keywords: Fiscal Policy, Budget Deficits, European Union; (follow links to similar papers)
JEL-Codes: E61; E65; (follow links to similar papers)
22 pages, March 2002
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