Work detail

Numerical fiscal rules and fiscal institutions in an economy with a dynamic common pool problem

Author: Bc. Lukáš Janásek
Year: 2019 - summer
Leaders: doc. PhDr. Martin Gregor Ph.D.
Work type: Bachelors
Language: English
Pages: 71
Awards and prizes: Nomination Deloitte Outstanding Thesis Award
Abstract: The focus of this bachelor’s thesis is fiscal policy of a fragmented government
that represents symmetric socio-economic groups. For the analysis of fiscal
policy, I develop the model of a dynamic common pool. In the model, the fiscal
choices of interest are 1) a level of tax revenue, 2) a level of public productive
spending and 3) an intertemporal choice of a level of group’s consumption
spending. For each of the fiscal decisions, I describe a distortion associated
with the fiscal choice stemming from the decentralized decision making. Next,
I examine the impact of a deficit ceiling and fiscal institutions that centralize
separate fiscal choices of groups on the three distortions. Due to the symmetry
of groups, the analysis abstracts from the efficiency-equity trade-off. Among
the key results is that three fiscal frameworks can attain the socially desirable
fiscal policy: 1) centralization of the productive spending and the tax revenue
combined with a deficit ceiling, 2) centralization of the consumption spending,
3) centralization of a budget size and the productive spending


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