Proceedings from the ECFIN Workshop "The budgetary implications of structural reforms" - Brussels, 2 December 2005



Table 11: Budget balances and structural reforms: results from the estimation of fiscal rules (sample defined
in such a way that there are no missing observations for any of the reform dummies)

Dependent variable:
primary CAB

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

Explanatory variables

Constant

-2.2***

-2.2***

-2.58***

-2.67***

-2.35***

-2.39***

-2.62***

-2.57***

(-3.65)

(-3.65)

(-4.14)

(-4.26

(-3.78)

(-4.01)

(-4.12)

(-4.14)

Lagged     dependent

0.75***

0.76***

0.75***

0.74***

0.76***

0.75***

0.77***

0.75***

variable

(16.26)

(16.58)

(16.66)

(16.02)

(16.6)

(16.79)

(16.99)

(16.68)

Output gap

0.019

0.006

0.018

0.034

0.012

0.022

0.005

0.016

(0.42)

(0.14)

(0.41)

(0.73)

(0.28)

(0.5)

(0.13)

(0.36)

Lagged debt/GDP ratio

0.044***

0.043***

0.051***

0.055***

0.04***

0.047***

0.05***

0.049***

(4.73)

(4.6)

(5.18)

(5.33)

(4.71)

(5.19)

(5.04)

(5.16)

Dummy labour market

-0.26

-0.34

reforms

(-1.18)

(-1.55)

Dummy product market

-0.12

0.01

reforms

(-0.56)

(0.05)

Dummy      pension

-0.49**

-0.54**

reforms

Interaction      labour

(-2.26)

(-2.39)

-0.24

market/product
market reforms

(-1.1)

Interaction      labour

-0.68***

market/pension reforms

Interaction product

(-2.74)

-0.37*

market/pension
market reforms

(-1.68)

Interaction      labour

-0.65**

market/product

market/pension reforms

(-2.38)

N. obs.

188

188

188

188

188

188

188

188

R sq.

0.65

0.65

0.65

0.66

0.65

0.66

0.66

0.66

Chi sq

853

848

875

878

853

941

908

879

Notes: Estimations method: fixed effects, instrumental variables regression. The output gap is instrumented with its own lag and
the US lagged output gap. All fiscal variables are expressed as shares on potential output.

Z statistics are reported in parentheses. *, **, and *** denote, respectively, significance at the 10, 5 and 1

per cent level. Coefficients for country fixed effects are not reported.

The pension reform dummy is constructed as an indicator taking value 1 if a pension reform was carried out in the current or
previous year and zero otherwise.

Source: Authors’ calculation on data described in table 1 and DG ECFIN AMECO database.

129



More intriguing information

1. ASSESSMENT OF MARKET RISK IN HOG PRODUCTION USING VALUE-AT-RISK AND EXTREME VALUE THEORY
2. On the Relation between Robust and Bayesian Decision Making
3. AGRICULTURAL TRADE LIBERALIZATION UNDER NAFTA: REPORTING ON THE REPORT CARD
4. The name is absent
5. The name is absent
6. Methods for the thematic synthesis of qualitative research in systematic reviews
7. DETERMINANTS OF FOOD AWAY FROM HOME AMONG AFRICAN-AMERICANS
8. The name is absent
9. Investment in Next Generation Networks and the Role of Regulation: A Real Option Approach
10. The name is absent