Open AccessFiscal sustainability in cee countries – the case of the Czech Republic, Hungary and Poland
Author(s) -
Joanna MackiewiczŁyziak
Publication year - 2015
Publication title -
equilibrium
Language(s) - English
Resource type - Journals
eISSN - 2353-3293
pISSN - 1689-765X
DOI - 10.12775/equil.2015.013
Subject(s) - czech , dominance (genetics) , cointegration , fiscal sustainability , unit root , economics , sustainability , fiscal union , macroeconomics , unit root test , debt , context (archaeology) , pension , fiscal policy , geography , econometrics , finance , biochemistry , ecology , philosophy , linguistics , chemistry , archaeology , biology , gene
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.