Sustainability of EU Fiscal Policies: a Panel Test

• Published in: Journal of economic integration Vol. 22; no. 1; pp. 112 - 127
• Main Author: Peter Claeys
• Format: Journal Article
• Language: Korean
• Published: 세종대학교 경제통합연구소 31.03.2007; 경제통합연구소
• Subjects: 경제학; Fiscal policy; Panel cointegration test; Debt sustainability; EMU; Panel unit root test
• ISSN: 1225-651X; 1976-5525

This paper examines the degree of correlation of EU regional employmentcycles and attempts to show whether these cycles reflect changing patterns ofspecialisation. By focusing on the regional level and by employing three differentindicators of similarity of sectoral structure, it improves on existing studies. Adynamic panel data model is estimated for region pairs by within groups, i.e., bya standard fixed effects estimator. Special attention is paid to capture the richdynamics which is typical of employment data. The key finding is that employmentgrowth is more synchronised when regions look alike in their sectoral structure.The empirical results again highlight the problem of a common monetary policyfor uncommon regions within the euro zone.JEL classification: E32, F15, R23 KCI Citation Count: 0