Does politics matter? A comparative assessment of discretionary fiscal policies in the euro area
Bibliographic Data
| ID | 11309213 |
|---|---|
| Authors | Giovanni Carnazza (0000-0002-7719-358X, University of Pisa), Paolo Liberati (0000-0002-6317-9701, Roma Tre University), Agnese Sacchi (0000-0002-7754-8360, University of Urbino, corresponding author) |
| Year | 2025 |
| Volume | 90 |
| Pages | 102435 |
| Publication date | 2025-12-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | European Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0176-2680 • E-ISSN: 1873-5703 |
| Publisher | Elsevier BV (PUBLISHER) |
| DOI | 10.1016/j.ejpoleco.2023.102435 |
| OpenAlex | W4382794661 |
| Language | EN |
| Citations received | 3 |
| References cited | 53 |
When using discretionary fiscal policies in the countries belonging to the European Union, any change affecting the current fiscal stance must run into the boundary designed by fiscal rules. This would imply that discretionary fiscal policies - being mainly driven by the need to comply with fiscal rules - might be scarcely affected by politics and the political characteristics of a country. We empirically test this hypothesis on a sample of 19 European countries observed over years 1995–2019. Using different econometric techniques and alternative specifications, we find a strong and robust fiscal pro-cyclicality. More importantly, the pro-cyclicality of the fiscal policy is not significantly affected neither by the behaviour of macroeconomic fundamentals nor by institutional and political variables. From a policy viewpoint, it seems that the mechanisms introduced to guarantee fiscal sustainability in the euro area can overcome all possible political influences on both the size and the sign of implementable fiscal policies. This would suggest that politics does not matter to shape the public budget, at least not so much as the fiscal rules
Decentralization · Economics · European union · fiscal federalism · Fiscal imbalance · Fiscal policy · Fiscal sustainability · Fiscal union · International economics · Macroeconomics · Market economy · Monetary economics · Political science · Politics · Fiscal Policies and Political Economy · Fiscal Policy and Economic Growth · Local Government Finance and Decentralization
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Fragmented fiscal policy
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Biases in Dynamic Models with Fixed Effects
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Fiscal reaction functions for the advanced economies revisited
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Why Do More Polarized Countries Run More Procyclical Fiscal Policy
Social expenditure and the politics of redistribution
Fragmented Government Effects on Fiscal Policy
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Rational inattention and politics
Fixed or Variable Needs? Public Support and Welfare State Reform
A Note on the Fractionalization of Some European Party Systems
The Politics of Fiscal Responses to the Crisis of 2008–2009
On the side effects of fiscal policy
Political Strategies and Fiscal Retrenchment
The politics of fiscal consolidation revisited
The politics of fiscal policy during economic downturns, 1981–2010
Defining and classifying technocrat‐led and technocratic governments
Partisan Politics and Fiscal Policy
Decision Making in Political Systems
Do Institutions Cause Growth
Identifying Government Spending Shocks
Economic Conditions and Public Attitudes to Welfare Policies
| Unique citing works | 3 |
|---|---|
| Citations per year | 1.5 |
| Citation span | 2024 - 2025 (2) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 3 |