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Testing Fiscal Sustainability In The Transition Economies Of Eastern Europe: The Case Of Poland (1999-2015)

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  • Tronzano, Marco

    (Economics Department, School of Social Sciences, University of Genoa, Italy)

Abstract

This paper reassesses the sustainability of public finances in Poland during the last two decades, characterized by the end of the macroeconomic stabilization phase and the implementation of several structural reforms. Cointegration tests allowing for regime-shifts reveal that fiscal policy is “weakly” sustainable, due to a significant divergence between revenues and expenditures in more recent years. Moreover, different from earlier research, I find strong support for bi-directional causality between revenues and expenditures. The main policy implication is that, in order to qualify for EMU membership, Poland should pursue further fiscal consolidation in the years ahead, implementing a more balanced fiscal-mix between revenue enhancement and expenditure reduction measures. La sostenibilità della politica fiscale nelle economie post-comuniste dell’Est Europa: il caso della Polonia (1999-2015) L’articolo analizza la sostenibilità delle finanze pubbliche in Polonia nel corso degli ultimi due decenni, caratterizzati dalla fine della fase di stabilizzazione macroeconomica e dalla realizzazione di numerose riforme strutturali. L’applicazione di test di cointegrazione che incorporano la possibilità di breaks strutturali evidenzia che la politica fiscale è “debolmente” sostenibile, a causa di una significativa divergenza tra entrate e spese negli anni piú recenti. Inoltre, diversamente dalla letteratura precedente, si riscontra l’esistenza di una significativa relazione di causalità bi-direzionale tra entrate e spese. La principale implicazione di politica economica è che, al fine di rispettare i criteri per l’ingresso nell’Unione Monetaria Europea, la Polonia dovrebbe proseguire il processo di consolidamento fiscale nei prossimi anni, nel contesto di una politica fiscale piú equilibrata tra misure di aumento delle entrate e provvedimenti di riduzione della spesa pubblica.

Suggested Citation

  • Tronzano, Marco, 2017. "Testing Fiscal Sustainability In The Transition Economies Of Eastern Europe: The Case Of Poland (1999-2015)," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 70(1), pages 103-132.
  • Handle: RePEc:ris:ecoint:0796
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    More about this item

    Keywords

    Fiscal Sustainability; Transition Economies; Poland; Cointegration; Regime Shifts;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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