Strategic interactions of fiscal policies in Europe: a global VAR perspective

Research output: Contribution to journalArticle


The paper analyses the strategic interactions of fiscal policies in the European Union context, by modelling the interdependencies arising between public and private sectors' saving–investment balances. In a global vector autoregressive framework, we use two empirical specifications to reflect some important differences in the sequencing of the policy decision-making process. In this setting, we draw policy implications with respect to fiscal policy coordination and fiscal policy discretion. We highlight the importance of several factors such as global capital flows, uncertainty with respect to policy actions and nature of the shocks, as key elements defining the dimension of the prevailing policy tradeoffs.
Original languageEnglish
Pages (from-to)49-76
Number of pages28
JournalJournal of International Money and Finance
Publication statusPublished - 2015


  • Discretion, Coordination, Saving–investment balances, Capital flows, Global VAR


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