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Public Investment and Fiscal Performance in the New EU Member States

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  • Jan Hanousek
  • Evžen Kočenda

Abstract

In this paper we analyze the dynamics of public investment and public finance in new members of the European Union, and also how these sectors were affected by changes in economic freedom and corruption. In terms of public finance (deficit and debt) we detect mostly improvement when there is less economic regulation. However, the effect of corruption with respect to public finance is not that conclusive. When we assess the role of regulation and corruption on public investment, we find that reductions in corruption as well as improvements in economic freedom tend to be associated with decreases in public investment. Further, we show that a rise in public investment often serves as an impetus for an increase in corruption.
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  • 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.
    • Handle: RePEc:ifs:fistud:v:32:y:2011:i::p:43-71
    DOI: j.1475-5890.2011.00127.x
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    More about this item

    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; Modern Monetary Theory
    • 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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