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Judging the Sustainability of Czech Public Finances

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Abstract

The position of Czech public finances has been pronounced unsustainable by economists, while politicians claim more or less the opposite. Correct judgment is complicated by the purposeful use of arguments by the two groups in disagreement, by use of different methodology to collect the data and above all, by the fact that there is no precise benchmark for measuring the sustainability. My work attempts to surpass those complications. It attempts to shed more light on Czech public finances sustainability and to present further arguments, presenting Czech public finances in widest international context possible and using comparable, samemethodology based data, as well as different approaches and angles public sector can be looked upon. The analysis suggests that concerns of economists about the future development of Czech public finances are legitimate.

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Paper provided by Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies in its series Working Papers IES with number 73.

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Length: 27 pages
Date of creation: 2005
Date of revision: 2005
Handle: RePEc:fau:wpaper:wp073

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Keywords: Public Finances; Sustainability index; Budget process; Fiscal illusion; Deficit bias; Factor analysis; Open-ended expenditures;

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  1. International Monetary Fund, 1996. "Budget Processes and Commitment to Fiscal Discipline," IMF Working Papers 96/78, International Monetary Fund.
  2. František Turnovec & Jacek W. Mercik & Mariusz Mazurkiewicz, 2004. "Power Indices: Shapley-Shubik OR Penrose-Banzhaf?," Working Papers IES 48, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2004.
  3. Martin Gregor, 2005. "Tolerable Intolerance: An Evolutionary Model," Working Papers IES 72, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2005.
  4. C. John McDermott & Robert F. Wescott, 1996. "An Empirical Analysis of Fiscal Adjustments," IMF Staff Papers, Palgrave Macmillan, vol. 43(4), pages 725-753, December.
  5. Vladimir Bezdek & Kamil Dybczak & Ales Krejdl, 2003. "Czech Fiscal Policy: Introductory Analysis," Working Papers 2003/07, Czech National Bank, Research Department.
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