Compliance with fiscal sustainability and the Euro

Afonso, António; Miranda, Catarina Farinha

http://hdl.handle.net/10400.5/99169

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Autores

Afonso, António

Miranda, Catarina Farinha

Resumo(s)

Through fiscal reaction functions, we investigate fiscal sustainability for five European country-group panels and check for a change in fiscal behaviour after countries adopted the euro as their currency. Using annual data for the period between 1990 and 2021, we identify evidence of average compliance with sustainability restrictions among Eurozone nations. However, for the Eurozone countries there is a smaller response, 0.046 percentage points (pp), to an increase in the debt ratio than in the case of the European economies without euro, where the response is around 0.1036 pp. Conversely, the euro membership has decreased the average responsiveness of primary balances to debt shocks as compared to the period before the implementation of the euro.

Palavras-chave

Fiscal Sustainability Debt Primary Budget Balance Fiscal Reaction Functions Euro Area

URI

http://hdl.handle.net/10400.5/99169

Citação

Afonso, António and Catarina Farinha Miranda .(2025). “Compliance with fiscal sustainability and the Euro”. REM Working paper series, nº 0371/2025

Editora

ISEG - REM (Research in Economics and Mathematics)

Coleções

REM - REM Working Papers Series

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