The paper analyses the EU fiscal rules from a political economy perspective and derives some policy lessons. Following a literature survey, the paper stresses the importance of appropriate incentives for rule compliance in an environment where national fiscal sovereignty precludes the option of...

The financial crisis of 2008/2009 has left European economies with a sizeable public debt stock bringing back the question what factors help to reduce these fiscal imbalances. Using data for the period 1985-2009 this paper identifies factors determining major public debt reductions. On average,...

We compute average mark-ups as a measure of market power throughout time and study their interaction with fiscal policy and macroeconomic variables in a VAR framework. From impulse-response functions the results, with annual data for a set of 14 OECD countries covering the period 1970-2007, show...

Do public sector wages exert pressures on private sector wages, or has the private sector a leadership role in wage setting? This paper tries to isolate the pure signalling effect that one sector might exert on the other by controlling for other determinants of wages (prices, productivity,...

The analysis of the macroeconomic impact of fiscal policies in the euro area has been traditionally limited by the absence of quarterly fiscal data. To overcome this problem, we provide two new databases in this paper. Firstly, we construct a quarterly database of euro area fiscal variables for...

Given the consolidation needs and the provisions of the new fiscal rule, budgetary planning in Germany has become more demanding. Fiscal projections are already difficult since the link between total tax revenue and economic activity is observed to be unstable. This Country Focus identifies...

This study focuses on the most important drivers of the swift current account rebalancing which is taking place in Estonia and considers the possible way forward. After very large deficits in the boom years (2005-2007), Estonia's current account balance turned positive in the downturn, as...

Romania's domestic demand boom over the past few years has led to rapidly widening current account deficits, reaching an estimated 13½% of GDP in 2008. High private sector dissaving has been exacerbated by a procycylical fiscal policy, with the public deficit likely to exceed 3% of GDP in 2008....

Measuring public sector efficiency is not generally straightforward and presents a difficult empirical issue, specifically in terms of adequate measurement of costs and outcomes. This Country Focus attempts to measure the efficiency of public spending in Malta by applying two alternative...

The UK's self-sufficiency in fossil fuels shields public finances from the negative effects of higher oil prices on general economic activity. Changes in the international price of oil affect government revenues from the corporate and household sectors. Taxes on oil production are estimated to...