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Fiscal rules in the European Union
Výprachtická, Terezie ; Šmídková, Kateřina (advisor) ; Koprnická, Kamila (referee)
The first part of the thesis treats the fiscal rules of the European Economic and Monetary Union. It begins by introducing this union's inception and by discussing its set of fiscal rules - the Stability and Growth Pact, including its reform. The rationale for policy coordination and the need for fiscal rules in a monetary union are then investigated. The Stability and Growth Pact is then assessed from this point of view. The most important part of the paper is devoted to the analysis of whether the Stability and Growth Pact could be substituted by the disciplining effect of the financial markets. Our findings suggest that there is certain interaction between the financial markets and the governments' decisions on the fiscal policies and that this reaction has become stronger after the beginning of the latest financial and economic crisis. However, the institutional setup and market conditions in the European Union are such that this interaction is biased and thus we conclude that the Union needs to have fiscal rules. The second of the thesis concentrates on the golden rule of public finance. It reviews the main advantages and disadvantages of the potential implementation of this rule in the European Union. Often the question of the productivity of public capital is at the heart of the rule's discussions....
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Fiscal Rules in the European Union
Výprachtická, Terezie ; Šmídková, Kateřina (advisor) ; Schneider, Ondřej (referee)
ABSTRACTS PART I - The EMU and its Fiscal Rules This paper treats the fiscal rules of the European Economic and Monetary Union. It begins by introducing this union's inception and by discussing its set of fiscal rules - the Stability and Growth Pact, including its reform. The rationale for policy coordination and the need for fiscal rules in a monetary union are then investigated. The Stability and Growth Pact is then assessed from this point of view. The most important part of the paper is devoted to the analysis of whether the Stability and Growth Pact could be substituted by the disciplining effect of the financial markets. Our findings suggest that there is certain interaction between the financial markets and the governments' decisions on the fiscal policies and that this reaction has become stronger after the beginning of the latest financial and economic crisis. However, the institutional setup and market conditions in the European Union are such that this interaction is biased and thus we conclude that the Union needs to have fiscal rules. JEL Classification: C23, E44, E61, E62, H62, H87 Keywords: European Economic and Monetary Union, Stability and Growth Pact, Financial markets, Fiscal rules, Policy coordination PART II - The Golden Rule of Public Finance and Productivity of Public Capital This...
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Inflation Differentials in the European Union: Panel Data Analysis of the Driving Factors for Inflation Differentials in the New Member States
Koprnická, Kamila ; Horváth, Roman (advisor) ; Šmídková, Kateřina (referee)
In this rigorous thesis, we analyse inflation differentials in the EU. The aim of the study is twofold. First, based mainly on literature review, we describe long-term trends and potential causes of inflation differentials in the euro area as well as in the new EU member states. Second, we examine the driving factors for inflation differentials in a panel of the new European Union member states via-à-vis the euro area in 1997-2006. In particular, we use the methodology of the influential study by Honohan and Lane (2003) exploring the role of nominal effective exchange rate, cyclical conditions, fiscal policies and price convergence in inflation differentials across the euro area countries. The application of the same methodology and explanatory variables enables us direct comparison with results of Honohan and Lane (2003). Our results suggest that the given factors are important determinants of inflation differentials in the new EU member states, too. Exchange rate appreciation and a higher price level in the new EU member states are associated with a narrower inflation differential vis-à-vis the euro area, while a fiscal deficit and a positive output gap seem to contribute to a higher inflation differential. Nevertheless, the effect of price convergence on inflation differentials is found to be...
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Europe 2020 Strategy: Are National Goals Reasonable?
Břízová, Pavla ; Šmídková, Kateřina (advisor) ; Martišková, Monika (referee)
The current economic strategy of the European Union - the Europe 2020 Strategy - has defined five measurable Headline Targets to enhance economic growth and allowed the Member States to set their own national numerical values for these targets. This thesis analyses quality of this target setting process. First, it tries to figure out whether the targets have been set better than in the preceding Lisbon Strategy. Second, it examines whether the National Targets have been defined clearly and unequivocally. Third and the most important, based on original empirical analysis, the thesis evaluates whether the National Targets have been determined reasonably with respect to general capacities of individual European economies. The main results reveal that some learning from the Lisbon Strategy has been made, but the quality of the National Targets is insufficient and should be increased. JEL Classification E61, F55, O52 Keywords Europe 2020, strategy, European Union, national targets, empirical analysis, MULTIMOORA, Ratio System of MOORA, Reference point of MOORA, Full Multiplicative Form, Lisbon Strategy Author's e-mail PavlaBrizova@seznam.cz Supervisor's e-mail katerina.smidkova@cnb.cz
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Inflation Differentials in the Europen Union: Panel Data Analysis of the Driving Factors for Inflation Differentials in the New Member States
Koprnická, Kamila ; Horváth, Roman (advisor) ; Šmídková, Kateřina (referee)
In this diploma thesis, we analyse inflation differentials in the EU. The aim of the study is twofold. First, based mainly on literature review, we describe long-term trends and potential causes of inflation differentials in the euro area as well as in the new EU member states. Second, we investigate the driving factors for inflation differentials in the new EU member states. In particular, we use the methodology of the influential study by Honohan and Lane (2003) exploring the role of nominal effective exchange rate, cyclical conditions, fiscal policies and price convergence in inflation differentials across the euro area countries. Our results suggest that these factors are important determinants of inflation differentials in the new EU member states, too.
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Europe 2020 Strategy: Are National Goals Reasonable?
Břízová, Pavla ; Šmídková, Kateřina (advisor) ; Martišková, Monika (referee)
The current economic strategy of the European Union - the Europe 2020 Strategy - has defined five measurable Headline Targets to enhance economic growth and allowed the Member States to set their own national numerical values for these targets. This thesis analyses quality of this target setting process. First, it tries to figure out whether the targets have been set better than in the preceding Lisbon Strategy. Second, it examines whether the National Targets have been defined clearly and unequivocally. Third and the most important, based on original empirical analysis, the thesis evaluates whether the National Targets have been determined reasonably with respect to general capacities of individual European economies. The main results reveal that some learning from the Lisbon Strategy has been made, but the quality of the National Targets is insufficient and should be increased. JEL Classification E61, F55, O52 Keywords Europe 2020, strategy, European Union, national targets, empirical analysis, MULTIMOORA, Ratio System of MOORA, Reference point of MOORA, Full Multiplicative Form, Lisbon Strategy Author's e-mail PavlaBrizova@seznam.cz Supervisor's e-mail katerina.smidkova@cnb.cz
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Fiscal Rules in the European Union
Výprachtická, Terezie ; Šmídková, Kateřina (advisor) ; Schneider, Ondřej (referee)
ABSTRACTS PART I - The EMU and its Fiscal Rules This paper treats the fiscal rules of the European Economic and Monetary Union. It begins by introducing this union's inception and by discussing its set of fiscal rules - the Stability and Growth Pact, including its reform. The rationale for policy coordination and the need for fiscal rules in a monetary union are then investigated. The Stability and Growth Pact is then assessed from this point of view. The most important part of the paper is devoted to the analysis of whether the Stability and Growth Pact could be substituted by the disciplining effect of the financial markets. Our findings suggest that there is certain interaction between the financial markets and the governments' decisions on the fiscal policies and that this reaction has become stronger after the beginning of the latest financial and economic crisis. However, the institutional setup and market conditions in the European Union are such that this interaction is biased and thus we conclude that the Union needs to have fiscal rules. JEL Classification: C23, E44, E61, E62, H62, H87 Keywords: European Economic and Monetary Union, Stability and Growth Pact, Financial markets, Fiscal rules, Policy coordination PART II - The Golden Rule of Public Finance and Productivity of Public Capital This...
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Measuring Financial Market Perception of Economic and Monetary Union Enlargement
von Terzi, Martina ; Holub, Tomáš (advisor) ; Fidrmuc, Jarko (referee) ; Dědek, Oldřich (referee) ; Šmídková, Kateřina (referee)
This thesis deals with assessing how financial markets perceive prospects of future euro area enlargement. Market views on such an enlargement are measured using two different approaches. The first approach, the static probability calculators method (SPC), is based on an existing method that was previously used for the old EU Member States. In order to overcome inherent shortcomings of this method, a second, completely new methodology with an indicator that is based on short-term dynamics of forward spreads was developed, further referred to as dynamic probability calculators (DPC). Both the SPC and DPC are applied to data from four Central Eastern European countries: the Czech Republic, Hungary, Poland, and Slovakia. In addition, data of other European countries were used to assess the robustness of the two approaches. The new methodology is conceptually based on the notion of ambiguity-averse agents. Specifically, it attempts to apply the framework of incomplete preferences, developing a general equilibrium framework, which allows for multiple equilibria supported by one set of fundamentals. This equilibrium indeterminacy offers a way to reconcile shortterm fluctuations of market prices with a relatively stable underlying economic environment and expectations. The thesis concludes with a...
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Fiscal rules in the European Union
Výprachtická, Terezie ; Šmídková, Kateřina (advisor) ; Koprnická, Kamila (referee)
The first part of the thesis treats the fiscal rules of the European Economic and Monetary Union. It begins by introducing this union's inception and by discussing its set of fiscal rules - the Stability and Growth Pact, including its reform. The rationale for policy coordination and the need for fiscal rules in a monetary union are then investigated. The Stability and Growth Pact is then assessed from this point of view. The most important part of the paper is devoted to the analysis of whether the Stability and Growth Pact could be substituted by the disciplining effect of the financial markets. Our findings suggest that there is certain interaction between the financial markets and the governments' decisions on the fiscal policies and that this reaction has become stronger after the beginning of the latest financial and economic crisis. However, the institutional setup and market conditions in the European Union are such that this interaction is biased and thus we conclude that the Union needs to have fiscal rules. The second of the thesis concentrates on the golden rule of public finance. It reviews the main advantages and disadvantages of the potential implementation of this rule in the European Union. Often the question of the productivity of public capital is at the heart of the rule's discussions....
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