A.4 Effects of Monetary Policy: Stabilization Policy
3.3 Fiscal Policy Treaties and Data Description
3.3.3 Data Description
All quarterly data stems from the Eurostat National Accounts Database. The dataset contains the log of seasonally-adjusted real GDP, seasonally-adjusted general government net lending in percent of seasonally-adjusted nominal GDP and general government gross debt in percent of nominal GDP. In cases when data was not available for the entire time span, e.g. only at annual frequency during some periods, Section 3.4 describes a method how to still obtain the structural components of the model. For some countries, the annual budget balances had to be obtained directly from the IMF’s World Economic Outlook Database as they were not covered by the Eurostat National Accounts Database. Hence, the data is either of quarterly or annual
4If not in the main text, full results on individual countries will be provided in the respective appendix.
frequency and covers a time span from usually 1995 to 2015 for most countries, for some even longer.5Variables used for estimation are quarterly, seasonally-adjusted real GDP and the quar-terly government budget balance in percent of nominal GDP. Consolidated, general government gross debt in percent of GDP is used as additional exogenous regressor.
Table 3.1 and Figure 3.1 provide an overview over the development of GDP growth, deficits and debt for all countries. I divide the sample into four subperiods and calculate the respective subsample averages. The summary statistics show that during the years 1995 - 2000, all coun-tries (except for Norway, Luxembourg and Ireland) have run substantial deficits. Substantial refers to the fact that the across-country average deficit is close to three percent, in particular after excluding the three countries named above. The budgetary position improved on average from 2000 to 2005. However, the group of countries which joined the European Union in 2004 give a mixed picture. Some of them consolidate or even run surpluses, whereas others as e.g.
Hungary or Poland have a deteriorated budget balance. With the exception of Bulgaria, Lux-embourg and the Scandinavian countries, all countries are hugely affected by the recession in 2008-2010 and the post- bank-bailout costs following the financial crisis. For the most recent pe-riod from 2010 to 2015, more than half of the countries in the sample face even higher deficits on average than before. Despite austerity programs and expenditure cuts, many countries in the other half still run substantial deficits highly above three percent of GDP. It seems that in the short run, deficits below the three percent boundary are hard to achieve for many countries following the European debt crisis. This effect is supported by the fact, that the sanctioning mechanism did never fully work and has been weakened or politically adjusted over and over gain.
The European economies have been growing strongly from 1996 to 2000. Exceptions were Germany, France or Italy - economies with a lot of problems concerning structural growth during that time. Data on GDP growth of the Eastern European transition economies exhibits catch-up growth and the Scandinavian economies have successfully recovered from the Scandinavian banking crisis in the early 1990’s. Growth increases even more during the early 2000’s but be-comes slow and moderate on average for the years 2005-2010, as many countries have been hit strongly by the Great Recession in 2008-2009. Post 2010 GDP growth does not give a clear pic-ture. Some countries quickly recovered, whereas especially the southern European Economies shrank on average.
With the exception of Italy and Greece, the level of debt in percent of GDP has been centered around 60% for major European economies in the late 1990’s. For other European countries debt has been even much lower. During the early 2000’s almost all countries converged below the now binding threshold of 60% debt to GDP ratio. Prominent exceptions among others are again Germany and France who have also been the first countries to receive an official warning by the European Commission in 2003 for breaking the Stability and Growth Pact. A sanctioning process which has been voted down by the council of European ministers of finance later. Deficits increased almost everywhere from 2005 until 2010 as the financial crisis and the subsequent debt crisis included debt-financed bank-bailouts and recovery programs. This trend continued
5For some Eastern European countries data is only available from 2000 onwards.
3.3FiscalPolicyTreatiesandDataDescription|79
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Figure 3.1.Quarterly GDP Growth (grey-solid) and Budget Balances (black-dashed) in % of GDP Until 2015
Notes:The figure shows quarterly, seasonally-adjusted real GDP growth rates and budget balance ratios in percent of nominal GDP. In case data has only been available every 4 quarters, corresponding value is reported as circle. All data is measured in Euro and has been provided by the European System of National and Regional Accounts (ESA 2010) and in some cases the IMF World Economic Outlook Database
|3RevisitingtheStabilityandGrowthPact:A20YearsEmpiricalPerspective
Countries Balance in Percent of GDP Growth Rate of GDP Debt in Percent of GDP
1995 - 2000 2000 - 2005 2005 - 2010 2010 - 2015 1996 - 2000 2000 - 2005 2005 - 2010 2010 - 2015 1995 - 2000 2000 - 2005 2005 - 2010 2010 - 2015
Austria -5.8 -2.3 -3.1 -2 3.2 1.7 1.3 1 70.4 69.7 72.8 83.2
Belgium -2.4 -0.41 -1.8 -3.5 2.7 2.1 1.3 1.2 124 105 95.4 106
Bulgaria 0.27 0.49 -2.3 -1.7 5.3 4.4 0.9 2.9 76.3 50.4 17 19
Croatia -4.9 -3.6 -5.6 -3.3 4.5 1.7 -1.1 1.6 NaN 38.6 42.3 75.4
Cyprus -3.2 -3.6 -0.93 -5.3 3.4 3.9 2.9 -1.3 53.7 61.4 56 87.7
Czech Republic -3.5 -4.8 -3 -2.1 1.2 3.8 2.4 1.3 15.6 25.7 29.9 42.1
Denmark -0.53 0.98 3.1 -1.6 2.8 1.6 0.2 0.81 56.4 48.5 34.2 44.9
Estonia -0.34 1.3 0.33 0.28 5 7 1 3.3 5.67 5.14 4.84 8.95
Finland -0.31 4.1 2.7 -2.4 4.8 3.1 0.78 0.55 44.7 40.8 37 54.8
France -3.4 -2.6 -3.7 -4.7 2.6 2.1 0.73 1.1 59.1 62.2 70.4 91.2
Germany -4 -3.5 -1.6 -0.74 1.6 0.99 0.62 1.9 59.6 61.6 67.7 77.3
Greece -7 -6.5 -8.9 -9.1 3.5 4.5 0.95 -4.3 NaN 104 113 166
Hungary -6.7 -5.9 -6.2 -3.1 2.6 4.2 0.53 1.5 65.4 56.8 70.7 79.1
Iceland 0.076 2.4 -6.2 -1.7 4.7 4.2 0.81 2.8 NaN NaN NaN NaN
Ireland 2.3 1.1 -13 -5 8.6 5.2 0.05 3.5 42.6 31.3 41.1 107
Italy -3.4 -2.9 -3.4 -3.2 1.5 1.5 -0.44 -0.33 109 105 106 126
Latvia -2.5 -0.65 -5.1 -1.3 5.1 9.5 -2.7 2.8 12.6 13.4 19.1 41
Lithuania -3.4 -2.3 -2.7 -3.8 4.7 6.6 2.4 3.2 24.2 21.7 19.8 38.7
Luxembourg 1.2 1.8 0.53 1.5 2.9 2 3.1 4.8 NaN 6.73 11.5 22.1
Malta -6.2 -3.1 -2.9 -1.5 1.6 2 3.2 6.2 NaN 67 65 69.1
Netherlands 0.46 -1.5 -1.9 -2.9 4.5 1.3 1.3 0.76 57 50.3 50.3 65.2
Norway 5.1 9.8 16 11 3.7 2.3 1.4 1.5 23.4 35.7 44.3 31.3
Poland NaN -5.2 -4 -4.3 NaN 4.3 4.5 3 NaN NaN 44.3 46.6
Portugal -3.5 -5 -6.4 -5.9 4.1 0.86 0.61 -0.95 51.2 57 73.9 123
Romania -4 -1.7 -5.3 -2.6 -1.3 5.5 2.9 2.3 22.3 21.8 16.2 36.3
Slovakia -8.1 -3.9 -4.8 -3.1 2 5.8 3.6 2.2 49.6 43.4 32.4 51.4
Slovenia -1.7 -2.9 -2 -6.4 4.1 3.5 2.3 0.63 24.8 26.9 27.8 62.4
Spain -4.1 -0.51 -1.9 -7.9 3.7 3.6 1.8 -0.14 62.7 50.1 42.9 86.1
Sweden -2 0.48 1.7 -0.66 3.2 3 1 2.6 64.1 49.7 40 40.2
Switzerland -2 -1.7 0.57 0.27 1.8 1.7 2.2 1.7 NaN NaN NaN NaN
UK -2.2 -1.4 -4.9 -6.9 3 2.9 0.68 2 38 36 49.9 84.3
Notes: The above table shows average summary statistics over five-year intervals. For some countries the first interval is not exactly five years (e.g. the sample only starts in 1996 or 2002) - however, to keep notation simple the corresponding value is then just the average of the remaining years. If the years until the year 2000 are missing completely, the corresponding first column is set to NaN.