In this paper we revisit one of the missing linksʺ between budget balances and the economic cycle, namely the impact of asset prices on fiscal revenues. We estimate revenue elasticities with respect to equity and real estate price indices for 16 OECD countries, as well as for a synthetic euro...

The study looks at primary expenditure developments in the euro area, its three largest members and four "macro-imbalances" countries for the period 1999-2009. It compares actual expenditure trends with those that would have prevailed if countries had followed neutral policies based on...