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Table 5 Impact of consolidations on the share of long-term unemployment

From: Fiscal consolidation and unemployment: does EPL matter?: A look at EU countries

  (1) (2) (3) (4)
  Action-based fiscal policy variables, 13 EU countries, 1992-2009 “Top-down” fiscal policy variables
Dependent variable: long-term unemployment ratio Budget balance Revenue Expenditure Change in structural balance
Explanatory variables Action-based Action-based Action-based  
Long-term unemployment share (1 lag) 0.798** 0.798** 0.798** 0.696**
  [17.80] [18.43] [0.0451] [16.66]
Fiscal policy variable 0.0367 −0.000789 −0.107 −0.470
  [0.0668] [−0.000893] [−0.868] [−0.927]
Constant 10.19** 10.25** 10.17** 15.95**
  [4.715] [5.097] [2.157] [7.397]
Observations 206 206 206 371
R-squared 0.855 0.855 0.855 0.700
Number of countries 13 13 13 27
  1. +, *, ** denote statistical significance at the 10, 5, 1 per cent level respectively. T tests are reported in square brackets.
  2. Specification. All regressions include country and year fixed effects.
  3. Estimation method. Action-based fiscal policy: fixed effect panel OLS. Top-down fiscal policy measures: fixed effect panel instrumental variables (the fiscal policy variable is instrumented with its own lag, the lagged output gap, and the lagged government debt/GDP ratio). Standard errors are robust with respect to hetereoschedasticity and non-independence within country clusters.
  4. Legend. Fiscal variables: see footnote to Table 1.