This time is different: Fiscal response to the COVID-19 pandemic among EU countries

This paper empirically analyses fiscal policy behavior in the European Union (EU) Member States and assesses how it has changed during the recent pandemic crisis compared to previous crisis situations. Based on panel estimations the outcomes reveal that this time is different, both concerning the policy direction as well as its magnitude. We confirm that fiscal policy has turned from formally pro-cyclical/a-cyclical design prior to COVID-19 period to countercyclical in the pandemic years. Moreover, this changeover is independent from the status of the EU membership, as it affects both Old Member States (OMS) and New Member States (NMS) likewise.