The name is absent

Figure 4.7 Results for the Primary Expenditures

Budget balances: actual and "core"

54 1

53 -

52 -

51 -

50 -

49 -

48 -

47 -

46 -

45 -

44 -

core balance: nu----actual balance           core balance ±1.96*std

—— reaction to cycle: gamma----EC automatic stabɪlzer: alpha --------reaction to cycle ±196*std -------

Budget balances: "core" and cyclically adjusted

"Core" discretionary policy

core balance: nu          EC cyclically adj.balance (based on potential GDP) ∣

core discretionary policy: eta core discretionary policy ±1.96*std       ∣

Figure 4.8 Decomposition of the Primary Expenditures

Core component (nu)
UC model

Irregular component (epsilon)
UC model

1,5

1

0,5

0

£ -0,5

-S

-1

On the expenditure side, the relatively minor impact of the automatic stabilisers related to
the unemployment transfers seems to be completely neutralised⁶² (see Figures 4.7 and
4.8).

Next we check for an asymmetric cyclical behaviour in downturns and upturns, i.e. taking
the cyclically adjusted (primary) budget balance as dependent variable and looking for

However, if the dependent variables are taken as ratios of the nominal GDP instead of potential
nominal GDP we get a pronounced pro-cyclicality of the cyclically adjusted revenues and a
pronounced counter-cyclicality of the cyclicality adjusted expenditures.

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