H62 - National Deficit; SurplusReturn

This paper presents the impact of fiscal councils in the European Union on public fi- nance. Using a fiscal reaction function, the impact of fiscal councils on the discretionary component of fiscal policy is examined. The impact of fiscal councils is a topical issue due to the fact that most EU countries have established fiscal councils in response to the EU legislation adopted after the last financial crisis. The empirical results imply that fiscal councils are complementary to numerical fiscal rules and instrumental for limiting deficit bias in the EU countries, most importantly through monitoring of compliance with fiscal rules and endorsement of macroeconomic and budgetary forecasts. Despite certain research limits, the empirical results point to similar conclusions as from recent papers. Out of the empirical findings, several recommendations can be made for fiscal policy-making.

The purpose of this study is to determine the validity of the triplet deficit hypothesis, which means the savings gap and budget deficit effect on the current account deficit. The empirical model is estimated for the G7 countries during the period between 1994 and 2011. The findings show that budget deficit and savings gap have important role in current account deficit in terms of estimator results. Moreover, bi-directional causality between the current account deficit and the savings gap and between the budget deficit and the savings gap are determined. So, especially the savings gap has an important effect on the current account deficit and the budget deficit. That is, triplet deficit hypothesis is valid in G7. Moreover, traditional approach is also valid since the causality is found between the current account deficit and budget deficit. Thereby, the authors conclude that the choice of statistical tools in analysing the nature of relationship among the current account deficit, the budget deficit, and the savings gap may play a key role for policy makers.

This study empirically attempts to unveil the contradictive findings regarding the relationship between fiscal imbalances and inflation in the context of the latest theoretical indications. The empirical analysis covers the period of 1970 to 2009 and applies dynamic panel techniques in a pool of 52 countries that comprises 19 developed and 33 developing ones. This segmentation is applied to illustrate the groups' specific features and the implications of heterogeneity. The findings provide supportive evidence for developing countries. We also find a significant degree of heterogeneity between the groups and the statistical significance of the relationship between fiscal imbalances and inflation in the case of developed countries cannot be ratified.

The paper is concerned with pension reform in the Czech Republic and abroad. It argues against two opinions: on the one hand, it is not necessary to do anything, and on the other hand, that a mandatory funded system should be implemented. Both approaches are false because of creating overwhelming explicit debts. The author recommends an evolutionary approach based on decreasing PAYG in combination with voluntary savings.

In the immediate period before adoption of euro many debates in Slovenia deal with fulfillment of Maastricht criteria. Slovenia has never had any significant problems with Maastricht fiscal criteria, but this does not mean that it has long-term sustainable fiscal situation. The purpose of this analysis is analyze (non)sustainability of Slovenia's fiscal stance. The methodology is based on objective analysis of long-term public finance's stability/sustainability. The analysis shows that Slovenia exceeded several times the level of sustainability in previous years. In next period the circumstances could only worsen unless necessary fiscal reform and other policy measures (especially reform of public-debt management) are introduced.

The article examines the impact of the budget deficit upon the term structure of Czech interest rates. An important feature of the model is that it enables us to directly test the predictions of the three alternative paradigms, the Keynesian, neoclassical and the Ricardian, concerning the long-term and short-term impact of deficit on interest rates. The result of the study, obtained by the IV method suggests that the budget deficit is negatively related to the interest rate level in the short-run. Therefore, the long-run Ricardian proposition cannot be rejected in favour of any alternative hypothesis.