Perspective of Sustainability of Fiscal Policy in Czech Republic
Perspective of Sustainability of Fiscal Policy in Czech Republic

Author(s): Dušan Litva
Subject(s): National Economy, Economic policy, Policy, planning, forecast and speculation, Economic development, Fiscal Politics / Budgeting
Published by: Masarykova univerzita nakladatelství
Keywords: fiscal policy; sustainability; prediction; SFP;
Summary/Abstract: Each country entering monetary union automatically gives up one of key macroeconomic tool- monetary policy. Hence second tool which is fiscal policy has increasing influence and significance. In this papers are discussed in theoretical part basic principles of fiscal policy, its tools and possible consequences of use. Emphasis is put on derivation of theoretical relationships using Wickens approach which is based on general dynamic equilibrium in economy and its application on evaluation of sustainability of fiscal stance. Needed data for model construction are inflation, GDP, and debt to GDP ratio. In this article was used data prediction of IMF for Czech Republic for period 2015- 2020 for formulation of hypothesis for sustainability of fiscal policy. For expression of degree of sustainability was established SFP index while comparing Czech Republic with other chosen countries. Based on predicted data fiscal policy of Czech Republic seems to be sustainable for explored period. Key drivers for this result are high and stable predicted growth of GDP, stable and low predicted inflation, but mainly decrease of overall predicted debt (resulting in decrease of debt and GDP ratio as a result of cumulative surpluses of government budget).

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