H50 - National Government Expenditures and Related Policies: GeneralReturn

Catastrophic natural events in the Czech Republic have always caused a considerable burden on public finance. However, this risk can be transferred to capital market investors through CAT bonds, which have never been used for this purpose in the Czech Republic. The paper deals with the theoretical background of CAT bonds, resulting in a back test simulation of a hypothetical CAT bond issued for the period 1999-2003. As a result, by transferring the risk to the capital market, investors could save a significant part of the Czech Republic's public funds.

In this study, sustainability of budget deficits in Turkey is examined empirically for the pe- riod from January 2006 to September 2020, using time series techniques based on monthly data, under the intertemporal budget constraint approach. In the analysis phase, the Johansen cointegration method was used for the long-term relationship of the series. Analysis results indicated that income and expenditure series are not cointegrated. It is concluded that budget policies for the period under consideration in Turkey are unsustainable; therefore, the applied fiscal policies should be reviewed.

The article presents an empirical analysis of the relation between recruitment in the all-volunteer Czech Armed Forces and selected economic indicators, including actual economic performance, situation on the domestic labour market and development of defence expenditures based on data for the period 2005-2019. The relation between military recruitment and economic performance was examined using values of GDP and GDP dynamics (GDP index). General unemployment rate, the economic activity index¹ and the military-to-general average wage ratio were used to analyse the relation of military recruitment and situation on the domestic labour market. The relation between military recruitment and defence expenditures was examined based on general defence burden (share of defence expenditures in GDP), state sector defence burden (share of defence expenditures in state budget expenditures) and year‑on‑year changes in defence expenditures.

Mancur Olson wrote his influential study Big Bills Left on the Sidewalk: Why Some Countries are Rich, and Others Poor in 1996. In his paper, Olson claimed that the differ-ences in economic development between countries are caused by only two factors: institutions and policies on the one hand and culture on the other. We attempt to test his conjecture using econometric modelling, combining and comparing it with a broadly defined orthodox production function in an indirect neoclassical notation (Solow-Minhas-Arrow-Chenery's SMAC framework). The "pseudo-production function" obtained is econometrically sound and of explanatory power similar to models including economic variables, although we find strong evidence of interdependence between capital-labour share and institutions and policies and culture. We consider the test, performed on panel data from 154 countries over five-year averages from 1980-2014, to be robust and consistent with Olson's ideas.

This paper investigates the government spending-revenue nexus for Croatia, Czechia, Hungary, Poland, Romania and Slovenia by using quarterly data and a nonlinear autoregressive distributed lag (NARDL) approach to cointegration. Our empirical findings support the fiscal synchronization for Slovenia, spend-tax for Czechia, tax-spend for Croatia and Hungary, and institutional separation or fiscal neutrality for Romania and Poland in the long run. Moreover, we find an asymmetric effect for Croatia, Czechia, Hungary and Poland in the long run and for all the countries in the short run. Therefore, our results clearly highlight the importance of asymmetric effects in government spending-revenue nexus. Our findings have some policy implications for these countries, such as providing a better coordination of government spending and revenue decisions and paying attention to the asymmetries.

The article investigates the differences in socioeconomic determinants of the size of the nonprofit sector serving households in the wealthy and less wealthy OECD countries. Based on panel data modelling of 22 wealthy OECD countries and 17 less wealthy OECD countries in the long-term period 2000-2014, authors revealed distinctive determinants of the size of the nonprofit sector serving households in the wealthy and less wealthy countries. The model identified GDP per capita, government health care expenditures per capita, number of refugees per hundred thousand inhabitants and unemployment rate as significant long-term determinants of the size of the nonprofit sector in the wealthy OECD countries. Alternatively, GDP per capita, age and educational structure are significant long-term determinants of the size of the nonprofit sector in the less wealthy OECD countries. Authors found opposing effect of GDP per capita on the size the nonprofit sector between the two groups of countries.

We examine the relationship between the government size and economic growth by using threshold regression model and quarterly data over the period 1998:1-2015:1 for Turkey. Our results provide a strong evidence for the existence of a non-linear relationship. The estimated threshold levels, as a percentage of GDP, are 16.5 for the government total expenditures, 12.6 for consumption expenditures and 3.9 for investment expenditures. We find that an increase in the government size leads to a significant rise (decline) in economic growth rate when the government size is below (above) the threshold level, confirming the predictions of Armey curve. Our findings have a clear policy implication: since the realized government consumption and total expenditures are well above the estimated threshold levels, a reduction in the government size would boost the growth rate.

The purpose of this study is to analyse the relationship between government expenditure and economic growth in Turkey. The study tests the validity of Wagner's law by applying autoregressive distributed lag (ARDL) cointegration technique using annual data over 1950-2010 period. In order to find out the possible impact of omitted variables, we first tested the standard bivariate versions of Wagner's law. In the next step by including a third variable - inflation ratio - the analysis extended on a trivariate system. The findings of each testing procedure indicate that omitted variables matter. Since, while there exists no long-run relationship between the variables in the first step of the testing procedure, a long-run correlation is found in the second step. The differences of this paper from the earlier studies testing the Law for Turkey are that, the causal link is examined within a trivariate framework and non-interest government expenditure is considered instead of total government expenditures.

Efficiency, economy and effectiveness: outcomes and impacts of public expenditures are main issue especially from mid eighties, when massive changes in the public sector started, influencing both allocative and X-efficiency of public expenditures. Public expenditure programmes are implemented on many levels, from international to municipal, and in many different forms. In our paper, we decided to perform the analysis on the level of self-governing regions in the Czech Republic. We focus on the following dimensions of expenditure analysis: the scope and scale of allocative and regulatory public expenditure programmes in the region (from EU level programmes to regional); existing approaches used to analyse effectiveness of selected public expenditure programmes; impacts of public expenditure programmes on selected recipients (including capacity of recipients to apply for public resources - capacity to prepare projects to compete for public funds).