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Public investment and fiscal performance in new EU member states

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  • Jan HANOUSEK

    ()

  • Evžen KOČENDA

    ()

Abstract

In this paper we analyze the dynamics of public investment and public finance in new members of the European Union, and also how these sectors were affected by changes in economic freedom and corruption. In terms of public finance (deficit and debt) we detect mostly improvement when there is less economic regulation. However, the effect of corruption with respect to public finance is not that conclusive. When we assess the role of regulation and corruption on public investment, we find that reductions in corruption as well as improvements in economic freedom tend to be associated with decreases in public investment. Further, we show that a rise in public investment often serves as an impetus for an increase in corruption.

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Paper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2010-07.

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Date of creation: 15 Mar 2010
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Handle: RePEc:mil:wpdepa:2010-07

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Keywords: Public finance; public investment; economic freedom; corruption; EU convergence and integration; macroeconomic policy; fiscal reforms; new EU members;

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Cited by:
  1. Ayala, Astrid & Blazsek, Szabolcs, 2013. "Structural breaks in public finances in Central and Eastern European countries," Economic Systems, Elsevier, vol. 37(1), pages 45-60.
  2. Zuzana Brixiova & Balázs Égert, 2012. "Labour Market Reforms and Outcomes in Estonia," EconomiX Working Papers 2012-16, University of Paris West - Nanterre la Défense, EconomiX.

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