Work detail

Selected Challenges of Fiscal Policy in the Czech Republic

Author: Mgr. Radka Štiková, Ph.D. (4.5.2009)
Year: 2009 - summer
Leaders: prof. RNDr. Jiří Hlaváček CSc.
Work type: Dissertations
Language: English
Pages: 101
Awards and prizes:
Abstract: Dissertation thesis is focused on three Czech fiscal policy challenges – the Czech pension system in the context of population ageing, the influence of the political cycle on the Czech economy and, finally, the macroeconomic impact of absorption of EU funds. All these issues are very closely connected with public finances, and undervaluation of their possible consequences could imply a substantial fiscal imbalance.

The first essay is focused on the pension system in the Czech Republic. The starting point is description of Eatwell’s work to give some basic intuition of the terms and concepts used in the pension reform debate. Paper then provides possible future scenarios and illustrates the future fiscal impacts of ageing, assuming preservation of the current Czech pension scheme up to 2050. The main conclusion is that changes in the component parameters of the current pension scheme have a rather small impact on the expected future imbalance of the Czech pension system. Therefore, a more fundamental reform of the current pension system should be considered.

The second essay is devoted to the political cycle issue in the case of the Czech Republic. It studies whether the dynamic behaviour of real GDP, unemployment and inflation is systematically affected by the timing of elections and by changes of government in the Czech Republic. Two basic models of political cycles are tested – political business cycle models and partisan theories. The tests partly support the opportunistic motives for the behaviour of Czech politicians. On the contrary, suppositions of partisan motives were not proved.

The last essay is focused on probably the most topical issue connected with our accession to the European Union and our new experience with drawing EU funds. This paper sets out to investigate the impacts of EU-related financial flows in the case of the Czech Republic, focusing mainly on GDP. Two methods are used to estimate the macroeconomic effects of absorbing EU funds – a model-based approach and a data-based approach. According to both approaches this implies an increase in economic stimulus over the considered horizon of approximately 0.5–1% of GDP in 2013. The expected positive impact on the Czech economy, however, will be highly dependent on the country’s ability to draw down EU financial sources for structural actions.
Downloadable: Dissertation - R. Štiková


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