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Elusive Counter-Cyclicality and Deliberate Opportunism? Fiscal Policy from Plans to Final Outcomes

Álvaro M. Pina
Publication Year 
JEL Code 
E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation
H20 - General
H50 - General
H60 - General
Drawing on the European Commission’s Autumn forecasts, I estimate fiscal reaction functions with four different information sets, ranging from budget plans to final outcomes. I also analyse deviations from plans during budget implementation. In a panel of 15 EU countries from 1987 to 2006, moving from plans to final data generally weakens the counter-cyclicality of budget balances and expenditures (though not of revenues), and reinforces electoral effects. Deviations from plans play a negligible role in the former finding, as they are often acyclical;but have a major role in the latter, as they display a clear opportunistic pattern.
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