abstract

The subject of this diploma work is to analyze proposals of fiscal consolidations in the Czech Republic and their following implementation in the years of 2002 to 2012. This work is trying to answer a question whether these proposals of the fiscal consolidaions were elaborated in agreement with research conclusions in the given field and whether they were successful in the sense of reduction of a deficit of the public budgets and public debt. In the first part of this work recent empirical studies with the following recomendations in the terms of realization of a fiscal consolidation are presented. Subsequently, a theoretical background in the form of keynesian and, so called, non-keynesian (expansionary fiscal consolidation hypothesis) effects of consolidation on economy is discussed. In the second part of this work an analysis of the proposals and implementation of the fiscal consolidations in the Czech Republic are presented with an attention to the evolution of the public budgets deficits and the public debt dynamic. The work uses, so called, narrative approach which is based on a study of open public documents from the archives of the Ministry of Finance of the Czech Republic, Parliament of the Czech Republic and the Czech National Bank. In the conclusions of this analysis it is stated that not a single implemented fiscal consolidation was successful in the terms of a reduction of the public budgets deficits and the public debt.

This diploma thesis is focused on measures, which have been adopted in Iceland due to the crisis. The first part of the thesis follows up causes and a course of the Icelandic banking crisis in order to understand the situation which the Icelandic authorities had to respond. Subsequently there are outlined measures which are adopted and in the last part these measures are evaluated. Emphasis is placed on analysing the measures of capital controls, banking sector restructuring and fiscal consolidation. All measures have achieved their objectives and have had significant impact on current recovery. Therefore at the end of the thesis is discussed the possibility of these measures applicability in other countries.

In this dissertation, the experience of Estonia, Latvia and Lithuania during the crisis in 2008-2010 is analysed. Its aim is to find out why the Baltic countries chose and were able to implement the strategy of “internal adjustment”, i.e. kept fixed exchange rates and achieved fiscal sustainability via fiscal consolidation. Furthermore, it asks why Estonia was able to handle the crisis most successfully. Based on the theories of currency crises and fiscal consolidation, a theoretical model is constructed. The empirical investigation relies on both qualitative and quantitative (statistical) methods. It is found in the dissertation that conventional theories cannot adequately explain the Baltic situation during the crisis. Therefore, non-conventional factors are investigated. The Baltic willingness to defend the fixed exchange rates can be attributed to certain economic factors (high flexibility and indebtedness in foreign currencies), continuity in economic policy, causal beliefs, and non-economic functions of fixed exchange rates. The implementation of a very large fiscal consolidation package was possible due to weak trade unions, a high degree of centralization, causal beliefs about appropriate economic policies, weak interest groups and lack of societal mobilization capacity. Estonia’s better performance was due to better informal institutions, namely a higher trust in government, which allowed Estonia to collect more taxes during the crisis than Latvia and Lithuania. / Disertacijoje nagrinėjama Estijos, Latvijos ir Lietuvos patirtis per ekonominę krizę 2008–2010 metais. Siekiama atsakyti, kodėl Baltijos šalys pasirinko ir sugebėjo įgyvendinti „vidinio prisitaikymo“ strategiją, t.y. išlaikė fiksuotą valiutos kursą bei taupymo būdu atkūrė fiskalinį tvarumą. Taip pat klausiama, kodėl Estija sugebėjo susitvarkyti su krize sėkmingiausiai. Remiantis valiutos krizių ir fiskalinės konsolidacijos teorijų įžvalgomis, disertacijoje konstruojamas vidinio prisitaikymo teorinis modelis. Empirinėje dalyje derinami kokybiniai ir kiekybiniai (statistiniai) metodai. Atskleidžiama, kad Baltijos valstybių situacijos adekvačiai negali paaiškinti vyraujančios politinės ekonomijos teorijos ir jų siūlomi veiksniai. Todėl atsižvelgiama į papildomus, nekonvencinius kintamuosius. Baltijos valstybių politikų norą išsaugoti fiksuotą valiutos kursą didino ekonominės struktūros ypatumai (lankstumas ir įsiskolinimas užsienio valiuta), ekonominės politikos tęstinumas, idėjiniai įsitikinimai, ne ekonominės fiksuoto valiutos kurso funkcijos. Itin didelę fiskalinės konsolidacijos programą pavyko įgyvendinti dėl silpnų profesinių sąjungų, didelės centralizacijos, vyraujančių idėjų apie tinkamą politiką, silpnų interesų grupių, menkos visuomenės mobilizacijos. Estijos didesnę sėkmę gali paaiškinti kokybiškesnės neformalios institucijos, ypač pasitikėjimas valdžia, dėl kurio šioje valstybėje per krizę mokestinės pajamos krito mažiau nei Latvijoje ir Lietuvoje.

While linkages between some macroeconomic phenomena (e.g. unemployment, GDP growth) and suicide rates in some countries have been explored, only one study, hitherto, has established a causal relationship between fiscal consolidation and suicide, albeit in a single country. This study examines the impact of budget consolidation on suicide mortality across all Eurozone peripheral economies, while controlling for various economic and sociodemographic differences. The impact of fiscal adjustments is found to be gender, age and time specific. In particular, fiscal consolidation has short-, medium- and long-run suicide increasing effects on the male population between 65 and 89 years of age. A one percentage point reduction in government spending is associated with an 1.39%, 2.35% and 2.64% increase in the short-, medium- and long-run, respectively, of male suicides rates between 65 and 89 years of age in the Eurozone periphery. These results are highly robust to alternative measures of fiscal consolidation. Unemployment benefits and substantial employment protection legislation seem to mitigate some of the negative effects of fiscal consolidation on suicide mortality. Plausible explanations for these impacts are provided and policy implications drawn. (authors' abstract) / Series: Department of Economics Working Paper Series

全球金融危機之後，在許多國家嚴重赤字之下，各界皆相當關心財政整頓效果。本文參考 Lin(2016) 的三階段方法估計動態追蹤資料分量迴歸，並使用敘事法 (narrative approach) 所建構的財政整頓衝擊變數，分析 17 個 OECD 國家 1978-2007 年跨國追蹤資料，探討財政整頓對經濟成長的影響效果。實證結果顯示財政整頓對經濟成長為負向影響，實施財政整頓會抑制產出，對一國經濟造成損害，且在經濟情勢不佳時，該負向效果更明顯。

This thesis investigates the effects of fiscal consolidations on income inequality. Although fiscal consolidations have become a popular economic research topic, their effects on income inequality, which itself has gained broad popularity lately, are relatively unexplored. Therefore, this thesis econometrically assesses the development of Gini coefficients during and after austerity measures. The paper applies regression analysis with panel data techniques using a sample of 17 high-income countries during the period of 1978 - 2009. It finds that a consolidation, measured by a deliberate improvement of the primary budget balance significantly increases income inequality of the referring country. In detail, an improvement of the primary budget balance about one percent of GDP is associated with an increase in market income inequality of 0.6% and a smaller increase in net income inequality in the year after. Moreover, this thesis explores the discretionary effect of different consolidation compositions. To do so, it introduces a novel approach to differentiate between consolidations that are either exclusively undertaken through spending cuts, tax increases or a combination of both. Thereby, it is found that especially tax-only consolidations tend to be equality-friendly but also rather small in size...

Esta tesis esta compuesta por tres capítulos. Los dos primeros capítulos estudian los efectos macroeconómicos de una consolidación fiscal y estímulos fiscales cuando la deuda privada es elevada. El tercer capítulo, estudia proyecciones de deuda púbica para el caso español bajo diferentes escenarios macroeconómicos. En el primer capítulo se analiza los efectos macroeconómicos de diferentes planes de consolidación fiscal en los que el gobierno reduce de forma gradual la ratio deuda pública-PIB y el sector privado está altamente endeudado. Lo resultados muestran que en el largo plazo, la consolidación fiscal genera beneficios en términos de output que son mayores en el caso en el que el sector público este altamente endeudado. En el corto plazo, la efectividad de la política fiscal en un escenario de deuda alta, depende del instrumento fiscal utilizado. Finalmente se analiza el bienestar social, encontrando que la política de consolidación fiscal produce una ganancia en términos de bienestar cuando el gasto público o el impuesto al consumo se utilizan como instrumento y este bienestar es mayor en el caso de endeudamiento privado alto. Sin embargo, cuando el instrumento fiscal son los impuestos al trabajo o al capital, se produce una pérdida de bienestar que es amplificada en un escenario de endeudamiento alto. En el segundo capítulo, se estudia como el tamaño de los multiplicadores fiscales depende del nivel de endeudamiento privado. Este artículo contribuye al debate de los efectos de los estímulos fiscales demostrando que el impacto de las políticas fiscales depende del nivel de endeudamiento, considerando el endeudamiento de los hogares y empresas. Finalmente, en el tercer capítulo se examina las proyecciones de deuda para la economía española bajo diferentes escenarios macroeconómicos. Se encuentra que la deuda aumentará hasta un 174% en 2035 si se cumple el escenario macroeconómico que predice la Comisión Europea. En el caso de considerar una subida de impuestos, la deuda disminuye pero lejos de llegar a los niveles pre-COVID.

Essay 1 (with Mikael Elinder): We show that house prices in general did not respond to a large cut in the property tax in Sweden. Our estimates are based on rich register data covering more than 100,000 sales over a time period of two and a half years. Because the Swedish property tax is national and thus unrelated to local public goods, our setting is ideal for causal identification of the property tax on house prices. Our result that house prices did not respond to the tax cut at the time of implementation cannot be explained by early capitalization at the time of announcement. Two other stories appear to explain our results. First, it is possible that house buyers expect an offsetting increase in the supply of housing. Second, house buyers might simply not understand how the tax cut affects total future costs of owning a house. Unfortunately, it has proven difficult to disentangle the two mechanisms, and we must therefore conclude that both may be relevant. Essay 2:  I investigate government consumption smoothing (sensitivity) under a balanced budget rule in Swedish municipalities. In general, I find Swedish municipalities to be highly consumption sensitive. Municipalities consume 87.6% out of predicted current revenues in the time period leading up to the implementation of the balanced budget rule, and they consume 76.3% out of predicted current revenue in thetime period following the implementation. Fiscally weak municipalities are found to be more consumption sensitive than fiscally strong municipalities. Very weak municipalities have become more consumption sensitive compared with very strong municipalities since the implementation of the balanced budget rule. Thus, I find indicative evidence that both credit market constraints and formal budget rules such as balanced budget rules increase municipal consumption sensitivity Essay 3: Using the Swedish municipal sector as my political laboratory, I study the effect of a coalition partner on policy outcomes. I use a version of Regression-Discontinuity Design (RDD) specifically suited to proportional systems to define close elections, which can be used for identifying the effect of the Left Party as coalition partner to the Social Democrats. The Left Party is found to have a positive and medium sized effect on the municipal income tax rate. The positive effect is in line with what we expect given the policy preferences of Left Party representatives, but also given the predictions from political fragmentation theory. I find no effects on expenditures or debt, and the negative result for investments is not robust. Essay 4 (with Linuz Aggeborn): In a model where voters and politicians have different preferences for how much to spend on basic welfare services contra immigration, we conclude that established politicians that are challenged by right-wing populists will implement a policy with no spending on immigration if the cost of immigration is high enough. Additionally, adjustment to right-wing populist policy is more likely when the economy is in a recession. Voters differ in their level of private consumption in such a way that lower private consumption implies higher demand for basic welfare services at the expense of immigration, and thus stronger disposition to support right-wing populist policies. We propose that this within-budget-distributional conflict can arise as an electorally decisive conflict dimension if parties have converged to the median voter on the size-of-government issue. / <p>Felaktigt isbn: 978-91-85519-61-3</p>

政府之公共支出及租稅結構差異會產生不同之所得分配效果；且為縮減國內赤字或債務，政府還會施行「財政重整」方案，以削減支出或提高租稅之方式，對各階層人民造成不同之衝擊。在所得分配不均之現況下，政府財政政策之公平面議題格外備受重視。因此，本文利用 17 個 OECD 國家於 1995 年至 2013 年之追蹤資料，探討在考量政府平常例行性之收支結構下，政府為特定政策目的採行財政重整措施時，對所得分配之影響。 本文之實證模型主要針對三種不同之財政重整類別進行分析。第一種財政重整變數討論當政府「同時」採行支出面及租稅面之財政重整時之重分配效果，結果顯示其對縮減貧富差距有正面之影響。而第二種及第三種財政重整類別則分別探討當政府僅施行支出面或僅施行租稅面之財政重整作為時，將會對社會所得分配不均的情況分別產生如何之改變。最終分析結果發現，支出面之財政重整及租稅面之財政重整亦皆具有使所得分配趨於均一之效果；且其中僅實施支出面財政重整時之重分配效果最強，其次為同時採行兩面向財政重整之時，而僅實施租稅面財政重整則相對效果最小。 因此可知，若政府施行適當之財政重整方案，則可於縮減國家債務之同時，也享有減緩社會所得分配不均的好處。但若同時採用兩面向之財政重整，則支出面重整之重分配效果將被微幅抵消。 / A government’s structure of public spending and taxation will have impact on social income distribution. Moreover, in order to reduce domestic deficit or debt, a government may implement “fiscal consolidation” programs, which will impose shock on each income stratum in the ways of cutting spending or increasing taxation. On the current situation of income inequality, the fairness issue of government’s fiscal policies has been highly emphasized. As a result, I use the data of 17 OECD countries during 1995 to 2013 to discuss the influence of fiscal consolidation on income distribution as well as considering the routine public spending and tax structure. The regression model in this paper mainly analyzes three different categories of fiscal consolidation. The first fiscal consolidation variable examines the redistribution effect when the government conducts spending-based consolidation and tax-based consolidation “simultaneously”. The result shows that it could shorten the income gap. The second and third categories analyze how income inequality would be changed when “only” implementing spending or tax-based consolidation respectively. And the result shows that both spending and tax-based consolidation can improve the condition of income distribution. Moreover, the redistribution effect of spending-based consolidation is the greatest, followed by the implementation of both two categories. The tax-based consolidation has the smallest effect on income redistribution. Hence, when the government conducts proper fiscal consolidation programs, it can enjoy the benefit of reducing debt and mitigating income inequality in the meantime. But if the government conducts spending and tax-based consolidation simultaneously, the redistribution effect will be slightly offset.