Convergence of fiscal policies in EMU: a unit root test with structural break
Résumé
The aim of this study is first to determine whether the fiscal policy among
EMU countries have converged and then to identify the source of the
convergence process. The convergence of fiscal policies was at the core
of the fiscal criteria imposed by the Maastricht treaty but it may also
have resulted from the economic and financial integration that preceded
the Treaty. Some unit-root tests are implemented on the cross-country
variance for various fiscal policy indicators where a break in the intercept
and the trend is allowed to catch whether the convergence is due to institutional
arrangements or to economic integration. We conclude that the
fiscal position has converged but the break date, selected before 1992,
indicates that the convergence process preceded the Maastricht treaty.
Considering the fiscal receipts, the hypothesis of convergence is accepted
only when they are adjusted from the cyclical component. The convergence
of fiscal expenditures is finally clearly rejected.
EMU countries have converged and then to identify the source of the
convergence process. The convergence of fiscal policies was at the core
of the fiscal criteria imposed by the Maastricht treaty but it may also
have resulted from the economic and financial integration that preceded
the Treaty. Some unit-root tests are implemented on the cross-country
variance for various fiscal policy indicators where a break in the intercept
and the trend is allowed to catch whether the convergence is due to institutional
arrangements or to economic integration. We conclude that the
fiscal position has converged but the break date, selected before 1992,
indicates that the convergence process preceded the Maastricht treaty.
Considering the fiscal receipts, the hypothesis of convergence is accepted
only when they are adjusted from the cyclical component. The convergence
of fiscal expenditures is finally clearly rejected.
Domaines
Economies et finances
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