Elasticity of local governments' expenditures to gross domestic product
|Author:||Bc. Barbora Bajgarová|
|Year:||2021 - summer|
|Leaders:|| doc. Petr Janský Ph.D.
|Work type:|| Bachelors
|Awards and prizes:|
|Abstract:||Public finance is an important topic in the work of modern economists. Local
finance forms a significant part of the public finance affecting quality of life of
all the citizens. The aim of this thesis is to explore the connection between economic development, represented by the gross domestic product, and Czech local
governments’ expenditures. Data from https://monitor.statnipokladna.
cz/ on expenditures and revenues of Czech municipalities are used to model
the relationship. The model confirms there is a relationship between GDP and
local expenditures. The effect is positive for current expenditures, meaning
they tend to decrease when GDP drops, and negative for capital expenditures,
meaning they tend to rise when GDP drops. However, different municipalities
(in terms of population size and responsibilities carried out) respond considerably differently. Moreover, the evidence of political budget cycles is found for
all the municipality types.