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Public investment and growth in New EU member states: an overview

Author

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  • Jan HANOUSEK

    ()

  • Evžen KOČENDA

    ()

Abstract

This paper presents major economic developments and recent trends in macroeconomic policy design of the New Member States of the European Union (EU). Overall macroeconomic situation, fiscal reforms, and public finance developments are discussed for each member state with accent on the developments in growing public investments. Sectors that benefited most are transport systems, general government services, housing, and education. Earlier favorable developments in the new EU members have been hampered by the recent crisis as external demand for exports fell and capital inflows into region were reduced, coupled with a lower domestic demand. The crisis has affected all new EU members with varying impact due to different magnitudes of earlier macroeconomic imbalances as well as differences in degree of economic integration with the rest of the EU. Future convergence and economic development of the new EU members will mainly depend on maintaining financial stability to regain the credibility of the foreign investors, rational fiscal policies with the support of the growth enhancing public investments and social network, and economic situation in the region’s major economic partners.

Suggested Citation

  • Jan HANOUSEK & Evžen KOČENDA, 2009. "Public investment and growth in New EU member states: an overview," Departmental Working Papers 2009-23, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  • Handle: RePEc:mil:wpdepa:2009-23
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    File URL: http://wp.demm.unimi.it/files/wp/2009/DEMM-2009_023wp.pdf
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    References listed on IDEAS

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    1. World Bank, 2002. "Republic of Latvia : Public Expenditure Review," World Bank Other Operational Studies 14601, The World Bank.
    2. Peter Friedrich & Joanna Gwiazda & Chang Woon Nam, 2003. "Development of Local Public Finance in Europe," CESifo Working Paper Series 1107, CESifo Group Munich.
    3. Merih Uctum & Thom Thurston & Remzi Uctum, 2006. "Public Debt, the Unit Root Hypothesis and Structural Breaks: A Multi-Country Analysis," Economica, London School of Economics and Political Science, vol. 73(289), pages 129-156, February.
    4. Jaromir Cekota & Rauf Gönenç & Kwang-Yeol Yoo, 2002. "Strengthening the Management of Public Spending in Hungary," OECD Economics Department Working Papers 336, OECD Publishing.
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    Citations

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    Cited by:

    1. Jan Hanousek & Evžen Kočenda, 2011. "Public Investment and Fiscal Performance in the New EU Member States," Fiscal Studies, Institute for Fiscal Studies, vol. 32(1), pages 43-71, March.

    More about this item

    Keywords

    Public finance; public investment; economic growth; EU convergence and integration; macroeconomic policy; fiscal reforms; new EU members;

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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