WORKING PAPER SERIES NO. 519 / SEPTEMBER 2005 NON-KEYNESIAN EFFECTS OF FISCAL CONTRACTION IN NEW MEMBER STATES by Andrzej Rzońca and Piotr Ciżkowicz WORKING PAPER SERIES NO. 519 / SEPTEMBER 2005 NON-KEYNESIAN EFFECTS OF FISCAL CONTRACTION IN NEW MEMBER STATES by Andrzej Rzońca 1 and Piotr Ciżkowicz 2 In 2005 all ECB publications will feature This paper can be downloaded without charge from a motif taken http://www.ecb.int or from the Social Science Research Network from the €50 banknote. electronic library at http://ssrn.com/abstract_id=781087. 1 National Bank of Poland; e-mail:
[email protected] 2 National Bank of Poland; e-mail:
[email protected] © European Central Bank, 2005 Address Kaiserstrasse 29 60311 Frankfurt am Main, Germany Postal address Postfach 16 03 19 60066 Frankfurt am Main, Germany Telephone +49 69 1344 0 Internet http://www.ecb.int Fax +49 69 1344 6000 Telex 411 144 ecb d All rights reserved. Reproduction for educational and non- commercial purposes is permitted provided that the source is acknowledged. The views expressed in this paper do not necessarily reflect those of the European Central Bank. The statement of purpose for the ECB Working Paper Series is available from the ECB website, http://www.ecb.int. ISSN 1561-0810 (print) ISSN 1725-2806 (online) CONTENTS Abstract 4 Non-technical summary 5 1 Introduction 7 2 A short survey of existing theories 7 3 Review of previous empirical studies 10 4 Econometric analysis 12 4.1 Fiscal impulses 12 4.2 Data 12 4.3 Specification of equations 13 4.4 Methodological issues 14 4.5 Results of the estimation 15 5 Descriptive analysis 19 6 Conclusions 28 References 30 European Central Bank working paper series 33 ECB Working Paper Series No.