Work detail

Sustainability of public debt, deficits of public budgets and economic growth

Author: Bc. Jana Marečková
Year: 2011 - summer
Leaders: Mgr. Kristýna Ivanková
Work type: Bachelors
Language: Czech
Pages: 95
Awards and prizes:
Abstract: Main goal of this thesis is to test sustainability of scal policy and e ects of
scal policy on economic growth in selected countries (Austria, Belgium, France,
Italy and United Kingdom). First part is about history of economic thought
concerning this topic and theoretical concept of models. Second part contains
econometric analysis. According to our results we proved sustainability of public
debt in Belgium and Italy. Positive reaction of primary surplus on rising debt to
GDP ratio was found for Austria and United Kingdom. However the sustainability
of public debt was not con rmed. Negative reaction of primary surplus on rising
debt to GDP ratio on average was the result for France.
In analysis of e ects of scal policy on economic growth we divided government
revenues as distortive and non-distortive and government expenditures as pro-
ductive and unproductive. Appropriate data was found only for Italy and United
Kingdom. In the case of Italy we found out that 1% increase in public de cit
decreases economic growth by 1%, 1% increase in distortive taxes decreases eco-
nomic growth by 1,2% and 1% increase in productive expenses increases economic
growth by 0,5%. Results of United Kingdom were biased because of the unappro-
priate division of revenues and expenses. This bias shows the importance of the
correct division of expenses and revenues for each country.
Downloadable: Bachelor Thesis of Marečková




Patria Finance