Work detail

Modeling of government spending and endogenous tax rates in New Keynesian models – the case of Czech Republic

Author: Mgr. Tomáš Zelený
Year: 2012 - summer
Leaders: PhDr. RNDr. Josef Stráský Ph.D.
Work type: Economic Theory
Language: English
Pages: 82
Awards and prizes: M.A. with distinction from the Dean of the Faculty of Social Sciences for an excellent state-final examination performance.
Abstract: The topic of fiscal policy has been long neglected in terms of fiscal policy´s interdependence with other main macroeconomic variables. Presented thesis therefore analyses the validity of different fiscal policy models for the case of Czech Republic. Dynamic stochastic general equilibrium (DSGE) framework is used throughout the thesis. Different fiscal policy rules are put into otherwise identical – benchmark - model and the models are compared to each other and to the benchmark model. The analysed fiscal policy models are an acyclical, counter-cyclical, two pro-cyclical and dichotomous spending models. We find that the most plausible fiscal policy rule is of pro-cyclical type and closely follows the model of Alesina et al. (2008). The model assumes that interest groups can steal part of government income through corruption and voters cannot observe it, so they demand maximum fiscal spending in the good times. The logic of this model is in accordance with the current state of fiscal and economic behaviour in Czech Republic.
Downloadable: Master Theses of Zeleny


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