Portuguese Economic Journal

, Volume 10, Issue 2, pp 83–108

Fiscal regime shifts in Portugal

Authors

  • António Afonso
    • European Central Bank, Directorate General Economics
    • Department of EconomicsISEG/TULisbon—Technical University of Lisbon
    • UECE—Research Unit on Complexity and Economics
    • Facultat de Econòmia i Empresa, Grup AQR IREAUniversitat de Barcelona
  • Ricardo M. Sousa
    • Department of Economics and Economic Policies Research Unit (NIPE)University of Minho
    • London School of Economics, Financial Markets Group
Original Article

DOI: 10.1007/s10258-010-0065-5

Cite this article as:
Afonso, A., Claeys, P. & Sousa, R.M. Port Econ J (2011) 10: 83. doi:10.1007/s10258-010-0065-5

Abstract

We estimate changes in fiscal policy regimes in Portugal with a Markov Switching regression of fiscal policy rules for the period 1978–2007, using a new dataset of fiscal quarterly series. We find evidence of a deficit bias, while repeated reversals of taxes making the budget procyclical. Economic booms have typically been used to relax tax pressure, especially during elections. One-off measures have been preferred over structural ones to contain the deficit during economic crises. The EU fiscal framework prompted temporary consolidation, but did not permanently change the budgeting process.

Keywords

Fiscal regimesMarkov SwitchingPortugal

JEL Classification

E62E65H11H62

Copyright information

© Springer-Verlag 2010