Business cycle determinants and fiscal policy:a panel ARDL approach for EMU

Papageorgiou, Theofanis and Michaelides, Panayotis G. and Tsionas, Efthymios (2016) Business cycle determinants and fiscal policy:a panel ARDL approach for EMU. Journal of Economic Asymmetries, 13. pp. 57-68. ISSN 1703-4949

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Abstract

In a monetary union, fiscal policy is probably the most important tool in dealing with country-specific fluctuations. This paper addresses some fundamental economic questions regarding the determinants of business cycles in the EMU in the time period 1995- 2012. More precisely, it acknowledges the significant role of fiscal policy and estimates relevant models for EMU countries where trade openness and other crucial variables are investigated. Various relevant econometric techniques have been employed, such as Panel ARDL. Social benefits are found to be the most important variable, whereas capital expenditures and indirect taxes are the major pro-cyclical variables. Furthermore, the formation of the EMU, along with the increasing trade openness, suggests a clear cut countercyclical effect. In other words, the common monetary policy and the deeper financial integration constitute reasons for the decrease in the magnitude of the fluctuations.

Item Type:
Journal Article
Journal or Publication Title:
Journal of Economic Asymmetries
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/2000
Subjects:
ID Code:
78530
Deposited By:
Deposited On:
15 Aug 2016 12:30
Refereed?:
Yes
Published?:
Published
Last Modified:
07 Aug 2020 03:48