Zdrojový dokument:Scientific papers of the University of Pardubice. Series D, Faculty of Economics and Administration. 47/2019
ISSN:1211-555X (Print)
Abstrakt:
The paper focuses on interactions between fiscal dynamics and current
account imbalances, and their impact on business cycle synchronization in the euro area
over the years 2001-2017. To join these two effects, we used panel data threshold model,
which determined three intervals of current account differences and estimated separate
relation between fiscal disparities and output gap disparities in each interval. If current
account differences are small (1st interval), the threshold model concluded for strong
positive effect of smaller budget balance differences on business cycle synchronization.
Nevertheless, higher current account differences (2nd and 3rd interval) are accompanied
by not significant or negative effect of budget balance differences on output gap
differences, i.e. there is no effect of fiscal convergence on business cycle
synchronization. As far as policy implications, if economic policies try to achieve tighter
business cycles by a fiscal convergence, they need to take into account possible tools
how to decrease current account imbalances as well.