Credibility of fiscal policy and politics: an empirical assessment

In this paper, we address the measurement and analysis of credibility in fiscal policy. In many instances, fiscal policy, as conducted by governments, is not perceived as credible because the targets set forward by the government are often not met. Usually, the divergence is on the negative side. Taxes are overestimated and spending is underestimated, leading to a deficit bias and growing indebtedness of governments. This paper focuses on a measure of credibility that builds on the deviations of the actual budget balances from the projections about these balances in the preceding year for the EU member states over the period 1999U+20132009. The objectives are to extract from these data insights into the credibility of these governmentsU+2019 fiscal policies and explain credibility using a number of political determinants.

ISBN:9787508747743

Publication year:2014

Accessibility:Closed