Fiscal policy within the EU increasingly experiences restrictions resulting from open financial markets. Besides global trends (e.g. growing interdependencies, the boom of derivative markets, the internet) political decisions in Europe such as the introduction of the Euro or the coming enlargement of the Community are changing the framework in which European government is situated. This project has contributed to a better understanding of financial market restrictions for fiscal policy in the EU under this changing environment. Even though it is empossible to summarise the differentiated results from different methods combined with different data bases in a few sentences the following statement emerges: If there are really binding restrictions associated with open financial markets they seem to be at work in relation to deficit policies. In contrast to that, the empirical evidence for an impact on the expenditure and revenue side of the budgets is rather weak.

Selected Publications

Articles in Refereed Journals

Heinemann, Friedrich (2001), Ursachen und Nachhaltigkeit sinkender Staatsdefizite in der EU, List Forum für Wirtschafts- und Finanzpolitik 27 (3), 211-228.

Heinemann, Friedrich (2000), Strategic Lessons from the Maastricht Criteria, Kredit und Kapital 33 (4), 455-467.

Heinemann, Friedrich (2000), Globalisation, EMU and Fiscal Discipline: Evidence from OECD Countries, Aussenwirtschaft, Schweizerische Zeitschrift für internationale Wirtschaftsbeziehungen 55, 211-232.

Discussion and Working Papers

Heinemann, Friedrich and Viktor Winschel (2001), Public Deficits and Borrowing Costs: The Missing Half of Market Discipline, ZEW Discussion Paper No. 01-16, Mannheim. Download