This paper evaluates the strength of automatic fiscal stabilizers in European countries by applying to the EU countries Taylor (2000)?'s methodology, which relates the budget balance to the output gap and the structural budget balance. Estimates are provided for the EU and for each of the EU...

This study applies Taylor's (2000) proposed fiscal rule to EU-15 countries. We show that such a simple, flexible and transparent fiscal rule, if applied to individual EMU countries, could improve the enforceability of the Stability and Growth Pact. This rule is used to compute the structural...