International Economics and Economic Policy

, Volume 11, Issue 3, pp 397–411 | Cite as

Sensitivity of fiscal-policy effects to policy coordination and business cycle conditions

  • Matti VirenEmail author
Original Paper


This paper deals with the problems of assessing the effects of fiscal policy in the European Monetary Union. Here, we face wide cross-country differences in key fiscal parameters, some of which may also be vary over time (business cycle). Moreover, these effects may also depend on trade spillover effects and thus on the extent of policy coordination. Our empirical analyses make use of data for 15 EU countries, mainly for the period 1970–2011. The results clearly indicate that fiscal multipliers are not constant across countries and time, being much larger during economic recessions. By contrast, the policy coordination-effects appear to be more homogenous, although it turns out that small countries may benefit more from coordination.


Fiscal policy Policy coordination Government deficit EMU 


H62 E61 E63 


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Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of TurkuTurkuFinland
  2. 2.Bank of FinlandHelsinkiFinland

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