NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Evi Pappa

Department of Economics
European University Institute
Villa San Paolo
Via della Piazzuolla 43
Florence 50133
Tel: 39 0554685908

E-Mail: evi.pappa@eui.eu

NBER Working Papers and Publications

June 2014Fiscal Consolidation with Tax Evasion and Corruption
with Rana Sajedi, Eugenia Vella
in NBER International Seminar on Macroeconomics 2014, Richard Clarida, Jeffrey Frankel, Francesco Giavazzi, and Hélène Rey, organizers
September 2006Does it Cost to be Virtuous? The Macroeconomic Effects of Fiscal Constraints
with Fabio Canova
in NBER International Seminar on Macroeconomics 2004, Richard H. Clarida, Jeffrey Frankel, Francesco Giavazzi and Kenneth D. West, editors
January 2005Does it Cost to be Virtuous? The Macroeconomic Effects of Fiscal Constraints
with Fabio Canova: w11065
We study whether and how fiscal restrictions alter the business cycle features of macrovariables for a sample of 48 US states. We also examine the "typical" transmission properties of fiscal disturbances and the implied fiscal rules of states with different fiscal restrictions. Fiscal constraints are characterized with a number of indicators. There are similarities in second moments of macrovariables and in the transmission properties of fiscal shocks across states with different fiscal constraints. The cyclical response of expenditure differs in size and sometimes in sign, but heterogeneity within groups makes point estimates statistically insignificant. Creative budget accounting is responsible for the pattern. Implications for the design of fiscal rules and the reform of the Stability a...

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