Bitte verwenden Sie diesen Link, um diese Publikation zu zitieren, oder auf sie als Internetquelle zu verweisen: https://hdl.handle.net/10419/297320 
Erscheinungsjahr: 
2023
Schriftenreihe/Nr.: 
ECB Working Paper No. 2880
Verlag: 
European Central Bank (ECB), Frankfurt a. M.
Zusammenfassung: 
This paper estimates a fiscal reaction function (FRF) framework for euro area countries to test for the impact of changes in inflation on fiscal policy. We find evidence of non-linear short-term effects of HICP inflation on the primary balance after controlling for other relevant factors. Over the period 1999-2022, we unveil an inverse U-turn relationship and an inflation turning point - beyond which its short-term (contemporaneous) impact on the primary balance starts being negative - at somewhat above 4% for the sample of mature euro area economies (EA-12, first twelve EA members) and around 6% for the whole sample of euro area countries in 2022 (EA-19). Using an alternative measure of "inflation surprise" (available for the period 2003-2022) yields robust results in the larger EA-19 sample and lowers the threshold to just below 5%. In terms of channels, the non-linear effects are found to propagate through both the primary expenditure and the revenue ratio (more robustly through the former) in the EA-12 sample, while only the combined effect on the primary balance seems to prevail for EA-19. These results reflect primarily the most recent high inflation episode and indicate that in such conditions inflation can be costly for public finance flows even in the shorter run.
Schlagwörter: 
fiscal reaction function
inflation
euro area
panel models
JEL: 
H60
E62
E31
C33
Persistent Identifier der Erstveröffentlichung: 
ISBN: 
978-92-899-6257-5
Dokumentart: 
Working Paper

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