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Mandatorní výdaje a flexibilita fiskální politiky v ČR
[Mandatory Expenditure and the Flexibility of Fiscal Policy in the Czech Republic]

Author

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  • Vojtěch Roženský

Abstract

This paper deals with the development of mandatory expenditure and its effect on the flexibility of fiscal policy in the Czech Republic. Fiscal flexibility is measured by the Steuerle-Roeper index of fiscal democracy, which expresses the proportion of budgetary revenue that remains after covering mandatory expenditure, i.e. the proportion of resources available for discretionary spending. The lower the value of the index, the lower the flexibility of fiscal resources. A negative value indicates that tax revenue is not sufficient to cover mandatory expenditure and the government has no resources available for discretionary spending. The analysis of Czech fiscal data from the period between 1995 and 2009 shows, that even though the share of mandatory expenditure increases, the flexibility of fiscal policy is still substantially better compared to Germany. The results of the comparison with the United States are ambiguous, depending on methodology. Some of the possible determinants of fiscal flexibility were tested by OLS regression. The analysis confirmed a negative relation of unemployment rate with the index of fiscal democracy. Panel regression also indicates a positive effect of GDP growth and a negative effect of the debt-to-GDP ratio. The effect of population ageing was not confirmed.

Suggested Citation

  • Vojtěch Roženský, 2012. "Mandatorní výdaje a flexibilita fiskální politiky v ČR [Mandatory Expenditure and the Flexibility of Fiscal Policy in the Czech Republic]," Politická ekonomie, Prague University of Economics and Business, vol. 2012(1), pages 40-57.
    • Handle: RePEc:prg:jnlpol:v:2012:y:2012:i:1:id:831:p:40-57
    DOI: 10.18267/j.polek.831
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    References listed on IDEAS

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    More about this item

    Keywords

    fiscal policy; mandatory expenditure; index of fiscal democracy;
    All these keywords.

    JEL classification:

    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

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