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The impact of the crisis on budget policy in Central and Eastern Europe. Bruegel Working Paper 2009/05, 31 July 2009

Darvas, Zsolt. (2009) The impact of the crisis on budget policy in Central and Eastern Europe. Bruegel Working Paper 2009/05, 31 July 2009. [Working Paper]

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    Abstract

    This paper describes the particular impacts of the financial and economic crisis on central and eastern European (CEE) countries, studies pro-cyclicality of fiscal policies, discusses the impact of the crisis on fiscal policy, and the policy response of various governments. After drawing some lessons for fiscal policy from previous emerging market crises, the paper concludes with some thoughts on the appropriate policy response from a more normative perspective. The key message of the paper is that the crisis should be used as an opportunity to introduce reforms to avoid future pro-cyclical fiscal policies, to increase the quality of budgeting and to increase credibility. These reforms should include fiscal responsibility laws comprising medium-term fiscal frameworks, fiscal rules, and independent fiscal councils. When fiscal consolidation is accompanied by fiscal reforms that increase credibility, non- Keynesian effects may offset to some extent the contraction caused by the consolidation.

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    Item Type: Working Paper
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > economic and financial affairs > fiscal policy
    EU policies and themes > External relations > EU-Central and Eastern Europe
    EU policies and themes > Policies & related activities > economic and financial affairs > financial crisis 2008-on and consequences/reforms
    EU policies and themes > Policies & related activities > budgets & financing
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    ["eprint_fieldname_eusries" not defined]: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Bruegel (Brussels) > Working Papers
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 28 Aug 2009
    Page Range: p. 60
    Last Modified: 15 Feb 2011 18:14
    URI: http://aei.pitt.edu/id/eprint/11464

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