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FISCAL CONVERGENCE IN THE EUROPEAN UNION BEFORE THE CRISIS
Author(s) -
BERTARELLI SILVIA,
CENSOLO ROBERTO,
COLOMBO CATERINA
Publication year - 2014
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/coep.12073
Subject(s) - convergence (economics) , economics , european union , harmonization , international economics , fiscal union , government revenue , european debt crisis , government spending , macroeconomics , revenue , fiscal policy , government expenditure , monetary economics , deficit spending , government (linguistics) , debt , european integration , public finance , finance , market economy , welfare , physics , acoustics , linguistics , philosophy
This article investigates fiscal convergence attained by EU countries in the period 1991–2008, by employing β‐ and σ‐convergence techniques complemented by a time series analysis. Overall our results highlight a distinctive convergence pattern in the European Union. Fiscal discipline leading to a fast convergence of deficit/ GDP ratio over the 1990s markedly weakened in the following decade. Nonetheless, after the Euro debut a pronounced convergence in total revenue and total government spending emerges, with different patterns characterizing each expenditure component. Despite this evidence of fiscal harmonization, European treaties failed to attract countries toward a common share of government debt over GDP . ( JEL E61, H11 , C23 )