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Compliance with fiscal sustainability and the euro

António Afonso & Catarina Farinha Miranda

Empirica2026https://doi.org/10.1007/s10663-026-09674-6article
AJG 1ABDC B
Weight
0.50

Abstract

Through fiscal reaction functions, we investigate fiscal sustainability for five European country-group panels and check for a change in fiscal behaviour after countries adopted the euro as their currency. Using annual data for the period between 1990 and 2021, we identify evidence of average compliance with sustainability restrictions among Eurozone nations. However, for the Eurozone countries there is a smaller response, 0.046 percentage points (pp), to an increase in the debt ratio than in the case of the European economies without euro, where the response is around 0.104 pp. Conversely, the euro membership has decreased the average responsiveness of primary balances to debt shocks as compared to the period before the implementation of the euro and the Eurozone core countries show a lower fiscal adjustment compared to periphery nations.

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https://doi.org/https://doi.org/10.1007/s10663-026-09674-6

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@article{antónio2026,
  title        = {{Compliance with fiscal sustainability and the euro}},
  author       = {António Afonso & Catarina Farinha Miranda},
  journal      = {Empirica},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1007/s10663-026-09674-6},
}

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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