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Czech Fiscal Policy: Introductory Analysis

Author

Listed:
  • Vladimir Bezdek
  • Kamil Dybczak
  • Ales Krejdl

Abstract

What is the size of quasi-fiscal operations and their impact on the overall fiscal balance and public debt in the Czech Republic? Is the recent increase in Czech fiscal deficits fully attributable to the business cycle, or are there non-cyclical factors in place? And last but not least, what are the long-term perspectives of the fiscal system given the size and speed of the expected population ageing process? These are the issues dealt with in the paper. Our results, although being surrounded by some margin of uncertainty, are quite cautionary. The transparency of the fiscal accounts seems to be insufficient and the size of off-budget operations is not negligible. Moreover, we have been witnessing a rapid increase in the cyclically-adjusted deficits, and Czech fiscal policy exhibits mainly pro-cyclical features. Looking into the more distant future reveals that our current fiscal system is extremely vulnerable to demographic pressures, even by international comparison. We argue that the fiscal authorities should increase the overall transparency of the fiscal accounts, mitigate the pro-cyclical characteristics of fiscal policy and make the whole fiscal system more resistant to the expected demographic pressures.

Suggested Citation

  • Vladimir Bezdek & Kamil Dybczak & Ales Krejdl, 2003. "Czech Fiscal Policy: Introductory Analysis," Working Papers 2003/07, Czech National Bank, Research Department.
  • Handle: RePEc:cnb:wpaper:2003/07
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    File URL: http://www.cnb.cz/en/research/research_publications/cnb_wp/download/wp7-2003.pdf
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    References listed on IDEAS

    as
    1. Thai-Thanh Dang & Pablo Antolín & Howard Oxley, 2001. "Fiscal Implications of Ageing: Projections of Age-Related Spending," OECD Economics Department Working Papers 305, OECD Publishing.
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    Cited by:

    1. Bezdek, Vladimir, 2005. "The Public Pension System in the Czech Republic from the Point of View of Public Finance," Discussion Paper 257, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    2. Božena Kadeřábková & Emilie Jašová, 2011. "Analýza ukazatele NAIRU na sektorové úrovni
      [Analysis of the Indicator NAIRU on the Sector Level]
      ," Politická ekonomie, University of Economics, Prague, vol. 2011(4), pages 508-525.
    3. Nathalie Girouard & Christophe André, 2005. "Measuring Cyclically-adjusted Budget Balances for OECD Countries," OECD Economics Department Working Papers 434, OECD Publishing.
    4. Jan Zápal, 2006. "Relation between Cyclically Adjusted Budget Balance and Growth Accounting Method of Deriving ‘Net Fiscal Effort’," Working Papers IES 2006/05, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Apr 2006.
    5. Michal Franta, 2012. "Macroeconomic Effects of Fiscal Policy in the Czech Republic: Evidence Based on Various Identification Approaches in a VAR Framework," Working Papers 2012/13, Czech National Bank, Research Department.
    6. Jaromír Hurník & David Navrátil, 2005. "Potential Output in the Czech Republic: A Production Function Approach," Prague Economic Papers, University of Economics, Prague, vol. 2005(3), pages 253-266.
    7. Tomas Havranek & Zuzana Irsova & Jiri Schwarz, 2016. "Dynamic elasticities of tax revenue: evidence from the Czech Republic," Applied Economics, Taylor & Francis Journals, vol. 48(60), pages 5866-5881, December.
    8. Jan Babecky & Kamil Dybczak, 2009. "The Impact of Population Ageing on the Czech Economy," Working Papers 2009/1, Czech National Bank, Research Department.
    9. Andrea Tkáčová, 2012. "Kompozitný predstihový indikátor hospodárskeho cyklu českej ekonomiky
      [Composite Leading Indicator of Czech Business Cycle]
      ," Politická ekonomie, University of Economics, Prague, vol. 2012(5), pages 590-613.
    10. Ambriško, Róbert & Babecký, Jan & Ryšánek, Jakub & Valenta, Vilém, 2015. "Assessing the impact of fiscal measures on the Czech economy," Economic Modelling, Elsevier, vol. 44(C), pages 350-357.
    11. Kamil Dybczak & Vladislav Flek & Dana Hajkova & Jaromir Hurnik, 2006. "Supply-Side Performance and Structure in the Czech Republic (1995-2005)," Working Papers 2006/4, Czech National Bank, Research Department.
    12. Kamil Dybczak, 2006. "Generational Accounts in the Czech Republic," Working Papers 2006/2, Czech National Bank, Research Department.
    13. Jaromír Hurník & Dana Hájková, 2007. "Supply-Side Performance in the Czech Republic: A Macroeconomic View (1995-2005)," Prague Economic Papers, University of Economics, Prague, vol. 2007(4), pages 319-335.
    14. Jan Zápal, 2007. "Judging the Sustainability of Czech Public Finances," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 1(1), pages 15-31, March.
    15. Jan Zápal, 2007. "The Relation Between the Cyclically Adjusted Budget Balance and the Growth Accounting Method of Deriving Net Fiscal Effort," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 1(3), pages 324-334, November.
    16. Kamil Dybczak, 2006. "Generational Accounts in the Czech Republic (in English)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 56(7-8), pages 298-317, July.
    17. Jaromír Hurník & David Navrátil, 2005. "Labor-Market Performance and Macroeconomic Policy: Time-Varying NAIRU in the Czech Republic (in English)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 55(1-2), pages 25-40, January.
    18. Nina Budina & Hana Polackova Brixi & Timothy Irwin, 2007. "Public-Private Partnerships in the New EU Member States," World Bank Publications, The World Bank, number 6743.

    More about this item

    Keywords

    ageing populations; cyclically-adjusted balance; fiscal policy; fiscal stance; offbudget transactions; quasi-fiscal policy.;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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