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On The Mechanisms of Achieving Fiscal (Un)Sustainability – The Case of Poland

  • Mackiewicz, Michał
  • Krajewski, Piotr

Aim of this paper is to assess empirically the sustainability of budgetary policy in Poland in Years 1992-2005. Our results show that structural surplus did not respond in a way that would stabilize the level of public debt, thus not fulfilling the condition of sustainability. It also showed asymmetric behaviour of revenues and expenditures: while the former tended to adjust to the level of debt in a stabilizing manner, the latter moved independently from debt, while also in a non-stationary way, which made fiscal policy unsustainable in the long run. Fiscal institutions were unable to respond in a debt- stabilizing manner to two large negative budgetary shocks: structural reforms of the public sector, and joining the EU. This makes them unlikely to respond to the future fiscal shocks, and suggests that fiscal institutions in Poland lack the ability to run sustainable fiscal policy.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 16035.

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Date of creation: Mar 2007
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Handle: RePEc:pra:mprapa:16035
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  1. Robert J. Barro, 1988. "The Ricardian Approach to Budget Deficits," NBER Working Papers 2685, National Bureau of Economic Research, Inc.
  2. Hamilton, James D & Flavin, Marjorie A, 1986. "On the Limitations of Government Borrowing: A Framework for EmpiricalTesting," American Economic Review, American Economic Association, vol. 76(4), pages 808-19, September.
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  4. Bharat Trehan & Carl E. Walsh, 1987. "Common trends, the government's budget constraint, and revenue smoothing," Working Papers in Applied Economic Theory 87-11, Federal Reserve Bank of San Francisco.
  5. Gordon, Robert J., 1989. "Comments 'political and economic determinants of budget deficits in the industrial democracies' by N. Roubini and J.D. Sachs," European Economic Review, Elsevier, vol. 33(5), pages 934-938, May.
  6. Doina Maria Radulescu, 2003. "An Assessment of Fiscal Sustainability in Romania," Post-Communist Economies, Taylor & Francis Journals, vol. 15(2), pages 259-275.
  7. Henning Bohn, 2005. "The Sustainability of Fiscal Policy in the United States," CESifo Working Paper Series 1446, CESifo Group Munich.
  8. Alesina, Alberto Francesco & Perotti, Roberto & Tavares, Jose, 1998. "The Political Economy of Fiscal Adjustments," Scholarly Articles 12553724, Harvard University Department of Economics.
  9. Alberto Alesina & Roberto Perotti & José Tavares, 1998. "The Political Economy of Fiscal Adjustments," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 197-266.
  10. Barro, Robert J., 1979. "On the Determination of the Public Debt," Scholarly Articles 3451400, Harvard University Department of Economics.
  11. Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, vol. 33(5), pages 903-933, May.
  12. Budina, Nina & van Wijnbergen, Sweder, 1997. "Fiscal Policies in Eastern Europe," Oxford Review of Economic Policy, Oxford University Press, vol. 13(2), pages 47-64, Summer.
  13. Neck, Reinhard & Getzner, Michael, 2001. " Politico-Economic Determinants of Public Debt Growth: A Case Study for Austria," Public Choice, Springer, vol. 109(3-4), pages 243-68, December.
  14. Kremers, Jeroen J. M., 1989. "U.S. Federal indebtedness and the conduct of fiscal policy," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 219-238, March.
  15. Henning Bohn, 1998. "The Behavior Of U.S. Public Debt And Deficits," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 949-963, August.
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