Quotation Bursian, Dirk and Weichenrieder, Alfons and Zimmer, Jochen . 2015. Trust in government and fiscal adjustments. International Tax and Public Finance 22 (3): S. 663-682.




The paper looks at the determinants of fiscal adjustments as reflected in the primary surplus of countries. Our conjecture is that governments will usually find it more attractive to pursue fiscal adjustments in a situation of relatively high growth, but based on a simple stylized model of government behavior, the expectation is that mainly high-trust governments will be in a position to defer consolidation to years with higher growth. Overall, our analysis of a panel of European countries provides support for this expectation. The difference in fiscal policies depending on government trust levels may help explaining why better governed countries have been found to have less severe business cycles. It suggests that trust and credibility play an important role not only in monetary policy, but also in fiscal policy.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal International Tax and Public Finance
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, INF-A, STRAT-B, VW-D, WH-B
Language English
Title Trust in government and fiscal adjustments
Volume 22
Number 3
Year 2015
Page from 663
Page to 682
URL http://link.springer.com/article/10.1007/s10797-015-9363-2
DOI 10.1007/s10797-015-9363-2
JEL H62 E62


Weichenrieder, Alfons (Details)
Bursian, Dirk ( Economics DepartmentDeutsche Bundesbank, Germany)
Zimmer, Jochen ( Economics DepartmentDeutsche Bundesbank, Germany)
Research Institute for International Taxation FI (Details)
Tax Policy and European Tax Law Group AB (Details)
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