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Fiscal sustainability in CEE countries – the case of the Czech Republic, Hungary and Poland

Author

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  • Joanna Mackiewicz-Lyziak

    (Warsaw University, Poland)

Abstract

The aim of the study is to assess fiscal sustainability in the Czech Republic, Hungary and Poland and to test for existence of fiscal dominance in these countries in the context of the fiscal theory of the price level. The empirical study is conducted using unit root tests and cointegration analysis with possible structural breaks. The approach is consistent with so called backward-looking approach for fiscal dominance testing proposed by Bohn (1998). The results suggest that in the Czech Republic and Poland fiscal dominance prevailed in the analyzed period, while in Hungary – monetary dominance. The result for Hungary may be caused, however, by a one-time reduction in debt resulting from changes in pension system.

Suggested Citation

  • Joanna Mackiewicz-Lyziak, 2014. "Fiscal sustainability in CEE countries – the case of the Czech Republic, Hungary and Poland," Working Papers 36/2014, Institute of Economic Research, revised Dec 2014.
    • Handle: RePEc:pes:wpaper:2014:no36
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    Cited by:

    1. Duy-Tung Bui, 2018. "Fiscal policy and national saving in emerging Asia: challenge or opportunity?," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 8(2), pages 305-322, August.

    More about this item

    Keywords

    fiscal sustainability; monetary and fiscal dominance; primary balance; debt; cointegration;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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