Abstract

http://ssrn.com/abstract=1727620
 
 

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Public Investment and Fiscal Performance in New EU Member States


Jan Hanousek


CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

Evzen Kocenda


Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute); CESifo; University of Michigan at Ann Arbor - The William Davidson Institute; Osteuropa Institut; Centre for Economic Policy Research (CEPR)

December 17, 2010

William Davidson Institute Working Paper No. 1006

Abstract:     
In this paper we analyze the dynamics of public investment and public finance in new members of the European Union, and also how these sectors were affected by changes in economic freedom and corruption. When we assess the role of regulation and corruption on public investment, we find that improvements in economic freedom tend to be associated with decreases in public investment, while reductions in corruption produce effects going in both directions. Similarly, we show that increases in public investment are often linked with decreases as well as increases in corruption. In terms of public finance we detect mostly improvement in debt when there is less economic regulation, while results for a deficit are less conclusive. On the other hand, improvements in the corruption environment are mostly associated with decreases in the deficit as well as debt. As a general rule that follows from our results, steps aimed at reducing corruption and the degree of economic regulation should lead towards improvements in the fiscal position in most of the new EU countries.

Number of Pages in PDF File: 32

Keywords: public finance, public investment, economic freedom, corruption, EU convergence and integration, macroeconomic policy, fiscal reforms, new EU members

JEL Classification: E61, E62, F42, H50, H60, O11

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Date posted: December 19, 2010  

Suggested Citation

Hanousek, Jan and Kocenda, Evzen, Public Investment and Fiscal Performance in New EU Member States (December 17, 2010). William Davidson Institute Working Paper No. 1006. Available at SSRN: http://ssrn.com/abstract=1727620 or http://dx.doi.org/10.2139/ssrn.1727620

Contact Information

Jan Hanousek
CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )
Politickych veznu 7
Prague 1, 111 21
Czech Republic
420 2 2400 5119 (Phone)
420 2 2421 1374 (Fax)
HOME PAGE: http://www.cerge-ei.cz
Evzen Kocenda (Contact Author)
Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )
P.O. Box 882
7 Politickych veznu
Prague 1, 111 21
Czech Republic
+420 224005149 (Phone)
+420 22427143 (Fax)
HOME PAGE: http://www.cerge-ei.cz
CESifo
Poschinger Str. 5
Munich, DE-81679
Germany
University of Michigan at Ann Arbor - The William Davidson Institute
724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States
Osteuropa Institut
Landshuter Str. 4
93047 Regensburg
Germany
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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