The analysis of the relationship between the level of public revenues and public expenditure (in relation to GDP) and the volume of investments in the 2001-2015 period in Central and Eastern European countries belonging to the European Union Cover Image

Analiza zależności pomiędzy poziomem dochodów publicznych oraz wydatków publicznych (w relacji do PKB) a wielkością inwestycji w latach 2001-2015 w państwach Europy Środkowo-Wschodniej należących do Unii Europejskiej
The analysis of the relationship between the level of public revenues and public expenditure (in relation to GDP) and the volume of investments in the 2001-2015 period in Central and Eastern European countries belonging to the European Union

Author(s): Magdalena Redo
Subject(s): Economic policy, Government/Political systems, Evaluation research, Fiscal Politics / Budgeting
Published by: Instytut Europy Środkowo-Wschodniej
Keywords: fiscal policy; non-Keynesian effects; government expenditure; government revenue; investment;

Summary/Abstract: More and more research results confirm the existence of non- Keynesian economic reaction to fiscal policy, partially explaining their limited effectiveness in stimulating the economy. These studies show that long-lasting fiscal consolidation, in particular by reducing public spending, can boost economic growth, and the key variable responsible for the expansive effect appears to be investment. The correlation analysis shows the existence of a negative (moderate weak) relationship between the average level of investment and the average size of the public sector in the economy (measured by the level of public revenue and public expenditure in relation to GDP) in the long run in 11 countries of Central and Eastern Europe belonging to the European Union (stronger for public expenditure: r = –0.36 and weaker for public revenue: r = –0.22). An analysis of the above correlation separately for individual economies showed negative correlation in 9 out of 11 CEE countries (both for public revenue and public expenditure) in the 2001-2015 period, of which four were strong or very strong.

  • Issue Year: 15/2017
  • Issue No: 1
  • Page Range: 159-172
  • Page Count: 14
  • Language: Polish