, Volume 34, Issue 1, pp 1–14

Budget balances in OECD countries: what makes them change?

Original Paper

DOI: 10.1007/s10663-006-9015-y

Cite this article as:
Tujula, M. & Wolswijk, G. Empirica (2007) 34: 1. doi:10.1007/s10663-006-9015-y


Fiscal balances have deteriorated quickly in recent years, bringing back to the foreground the question what factors explain such sharp changes. This paper takes a broad perspective at the issue regarding countries included, the range of potential explanatory variables, and the time-span covered. The empirical analysis shows that changes in budget balances are affected by debt growth, macroeconomic developments and political factors. In particular, we find that the run-up to EMU induced additional consolidation in Europe and that budget balances deteriorate markedly in election years. Asset prices also affect budgets, but the impact remains limited in normal times.


Fiscal policy Asset prices Economic growth Budget balance Election cycle 

JEL classification

E61 E62 H61 H62 

Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  1. 1.Monetary Policy Stance DivisionEuropean Central BankFrankfurt am MainGermany
  2. 2.Fiscal Policies DivisionEuropean Central BankFrankfurt am MainGermany