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

- total taxes as % GDP (TYQ)⁴⁹

- total taxes cyclically adjusted as % trend GDP (TYQA)

Business cycle variables:

- growth real GDP in % (GROWTH)

- growth domestic demand in % (GROWTHFDDV)

- output gap in % (OUTPUTGAP)

- unemployment rate in % (UNEMP)

- change in unemployment rate in percentage points (DUNEMP)

Consumer confidence/spending:

- consumer confidence yearly average standardized (CCONFST)

- savings ratio in % (SRATIO)

- growth private consumption in % (GROWTHCPV)

- growth private residential investment in % (GROWTHIHV)

Business confidence/investment:

- business confidence yearly average standardized (BUSCONFST)

- growth business investment in % (GROWTHIBV).

This analytical section is to make a clear distinction between the following two questions: First, to
which extent are the economic and fiscal features of reform periods different from periods with
relatively stable institutions? And, second, how do these features evolve from the pre-reform
situation over the reform period itself up to the years immediately after a reform? So far, these
questions have not been precisely distinguished in existing descriptive approaches.50

In this section, the results of two tests are presented to shed lights on typical budgetary features of
reform processes according to those two distinct questions.

The first test’s focus is on the typical properties of budget and the economic environment prior to
a reform (period BR in the terminology of the stylized reform phasing of the last section).

⁴⁹ Further differentiations between household and business taxation was included in the testing but did not result in any further insights and, hence,
are not reported.

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