Real time uncertainty in fiscal planning and debt accumulation in the euro area
Paloviita, Maritta (21.07.2017)
JulkaisusarjaInternational Economics and Economic Policy
NumeroJanuary 2017, Issue 1
Julkaisun pysyvä osoite onhttps://urn.fi/URN:NBN:fi:bof-202002181138
Using real time data from the OECD this study explores euro area fiscal policies since the late 1990s. The results indicate that in the so-called periphery countries (Greece, Ireland, Italy, Portugal and Spain) ex ante fiscal plans have been more sensitive to economic cycles in the countercyclical direction than in the other euro area countries. Accumulated debt ratios in the periphery reflect high initial debt ratios, underlying deficit biases and cumulated errors in the data on macroeconomic imbalances. Overall, reliable statistics, balanced macroeconomic developments and longer-term policy orientation are crucial for sound and sustainable public finances.
BoF DP 35/2012