Fiscal Sustainability in CEE Countries – the Case of the Czech Republic, Hungary and Poland
Fiscal Sustainability in CEE Countries – the Case of the Czech Republic, Hungary and Poland

Summary/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 domi-nance in these countries in the context of the fiscal theory of the price level. The empirical study is conducted using unit root tests and co-integration 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.

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