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oai:docta.ucm.es:20.500.14352/132262023-08-26T19:49:19Zcom_20.500.14352_14col_20.500.14352_15

Single currency and fiscal performance: the early Euro Area in perspective Jalles, Joao Tovar Mulas Granados, Carlos Tavares, José Correa Caro, Carolina 336.74 H30 H60 E50 Synthetic control method Euro Area Fixed exchange rates Fiscal discipline Political economy Exchange rate Statistical analysis Unión económica y monetaria europea (Unión Europea) Política económica y financiera Política fiscal europea Dinero Econometría (Economía) Finanzas Integración económica 5310.08 Acuerdos Monetarios Internacionales 5902.06 Política Económica 5301.01 Política Fiscal y deuda Publica 5304.06 Dinero y Operaciones Bancarias 5302 Econometría 5309.02 Integración Económica We examine how exchange rate regimes affect fiscal discipline by investigating European countries as they transitioned from flexible to fully fixed exchange rates under the Euro. We apply the synthetic control method to estimate, for each Eurozone country, its counterfactual budget stance under flexible rates. Our evidence strongly suggests that fixing exchange rates negatively impacted negatively fiscal discipline. However, effects were not homogeneous, as they were mediated by political factors. For example, countries where policymakers faced a longer political horizon and operated within a more cohesive political environment, managed to perform better in terms of fiscal discipline. Depto. de Economía Aplicada, Estructura e Historia Fac. de Ciencias Económicas y Empresariales TRUE pub 2023-06-17T13:21:33Z 2023-06-17T13:21:33Z 2018-03 journal article https://hdl.handle.net/20.500.14352/13226 1350-4851 10.1080/13504851.2017.1327119 eng restricted access application/pdf Routledge