A Disaggregated Approach to Analyzing Public Finances in Austria
AbstractThe budget elasticities derived in this study indicate that a 1% deviation of GDP from the long-term growth potential causes a purely cyclical change of 0.38% of GDP in Austria's budget balance. The predominance of progressive income taxation in Austria is reflected in the estimated elasticity of direct taxes on households to average income of 1.3. We expected the elasticity of direct taxes on enterprises to gross operating surplus to come to 1, since the corporate income tax is a proportional tax; the computation result of 0.9 confirms our assumption. The elasticity of indirect taxes to private consumption of 0.97 documents both the high share of proportional taxes and the impact of specific taxes, while the elasticity values of social security contributions and pension insurance contributions to average income (0.99 and 1) reveal the close correlation of these budget categories with the macroeconomic base variable. The elasticity of unemployment benefits to the number of unemployed persons of 0.9 results from the rising average duration of unemployment. Between 2000 and 2004, the general government's structural budget balance (i.e. the budget balance adjusted for cyclical effects and one-off measures) improved from —2.1% to —0.9% of trend GDP. The development of the structural budget balance in Austria is above all shaped by discretionary measures based on legislative changes. The deviation of budget categories' development from the underlying tax base, which is especially pronounced for progressive taxes, and the deviation of the tax base from GDP are only of minor importance in the development of public finances in Austria.
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Bibliographic InfoArticle provided by Oesterreichische Nationalbank (Austrian Central Bank) in its journal Monetary Policy & the Economy.
Volume (Year): (2005)
Issue (Month): 4 ()
Postal: Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria
Find related papers by JEL classification:
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- H6 - Public Economics - - National Budget, Deficit, and Debt
- C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
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77, Quebec a Montreal - Recherche en gestion.
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- Jana Kremer & Karsten Wendorff, 2004. "Germany after Qualification for EMU: A Disaggregated Approach to the Analysis of Structural Public Finance Developments," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 73(3), pages 358-370.
- Klaus Vondra, 2013. "Austria Withstands Recession: Return to Positive Growth in Early 2013," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 6â11.
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