Research background: The research area on the quality of public finance (QPF) appears to be intellectually attractive. In the light of the challenges of the 21st century, public finance should be characterized by adequate quality, ensuring effective implementation of the economic functions of government. The problem of QPF is increasingly more frequent in the face of a deteriorating fiscal situation of most countries in Europe and around the world. Hence, it is worth considering which factors determine the quality of public finance. Purpose of the article: This article aims to show the possibility of assessing the quality of public finance in the light of fiscal governance concept.  The identification of the key components of QPF seems to be useful from the point of view of empirical research, and can be implemented to assess the quality of public finance in the EU–28. Methods: Descriptive analysis along with principal component analysis (PCA) was implemented to indicate dimensions of QPF. Findings & Value added: The quality of public finance consists of a well-designed fiscal rules (numerical and non-numerical) and institutions, as well as structural reforms. The obtained results allow to characterize the quality of public finance through the prism of six identified principal components. They have a mixed character, two of them are partly or totally related to the institutional aspects of public finance, which proves their importance in the process of improving the quality of public finance. Improving the quality of public finance remains a key challenge for policy makers in the EU. The growing impact of globalization and the aging population also cause the need to improve the qualitative aspects of fiscal policy. The study contributes to the literature on public finance, particularly in the empirical dimension through broadening the knowledge on institutional factors which can be used to measure QPF index. The results of research have certainly enriched the existing knowledge on the phenomenon of QPF and the ways of its measurement.

This article traces the development of the concept of homo oeconomicus, a fundamental principle of mainstream economics. The concept is compared against alternative approaches proposed by representatives of other schools of thought such as heterodox economics, behavioural economics and neuroeconomics. Special attention is paid to the Resourceful, Evaluative, Maximising Man (REMM) model, which seems to be a missing link between homo oeconomicus and homo moralis. It is simultaneously assumed that the narrow interpretation of homo oeconomicus as a being solely guided by self-interest is oversimplified and that this kind of paradigm may be harmful to society in the real world. The article was written on the basis of a content analysis of literature. For the purposes of the research, both descriptive and interdisciplinary methods were employed. As a result of the conducted analysis, a conclusion was drawn that the explanation of economic behaviours requires a more holistic and dynamic approach. The incompleteness and inadequacy of the paradigm of homo oeconomicus were highlighted. It was noted that the rationality of the economic man results not only from concern for self-interest but also from his embeddedness in society and culture. The study showed that economic behaviour is context-dependent and additionally determined by morality derived from social and religious systems. In conclusion, it was emphasised that the economic man cannot be reduced to a machine concentrating on his own material well-being. The morality of an individual making choices in a world of scarcity is inevitably subject to assessment.

Autorzy proponują inne od dotychczasowych, znacznie szersze podejście do równowagi gospodarczej, oparte na osiągnięciach różnych nurtów badań nad rolą instytucji w życiu gospodarczym i społecznym. Rozważania te są zarazem refleksją metodologiczną i filozoficzną nad stanem nauk ekonomicznych, zwłaszcza w odniesieniu do podstaw ładu instytucjonalnego gospodarki i życia społecznego. Mają one charakter interdyscyplinarny, bowiem tylko takie podejście może być właściwe w wyjaśnianiu złożonych, systemowych uwarunkowań funkcjonowania gospodarki i jej rozwoju. W odróżnieniu od dominujących koncepcji równowagi gospodarczej w ujęciu ekonomii neoklasycznej, które zakładają stałość ram instytucjonalnych rynku i decydującą rolę mechanizmów rynkowych w kształtowaniu równowagi gospodarczej, instytucjonalna koncepcja równowagi zakłada jej wielowarstwową strukturę oraz komplementarność instytucji zakorzenionych społecznie, o różnej trwałości, zasięgu i genezie. Teoria równowagi instytucjonalnej wyjaśnia, dlaczego gospodarki i społeczeństwa nie popadają w ruinę mimo dotkliwych nierównowag mikro- i makroekonomicznych, pojawiających się co jakiś czas (czasem cyklicznie). Ta teoria jest także bardziej użyteczna niż wiele innych w wyjaśnianiu przyczyn upadku nie tylko systemów ekonomicznych, ale też cywilizacji.

Purpose: The main aim of this article is to conduct an econometric analysis and to examine relations between institutional factors pertaining to the quality of governance and the level of GDP per capita in 28 member states of the European Union. Design/Methodology/Approach: The analysis of public governance and good governance concepts is based on critical analysis of the recent literature. Institutional quality of the public sector is analyzed as a part of New Institutional Economics theory. This allows to indicate the institutional dimensions of the quality of public sector. In the empirical part, focus was given to measuring governance and examining relations between institutional factors pertaining to the quality of public governance and the level of GDP per capita in 28 member states of the European Union. To this end, World Bank data were used, and six indicators proposed by this institution were assumed as synthetic measures of governance quality (The Worldwide Governance Indicators-WGI). Findings: The conducted analyses resulted in positively verifying the model of relations between dimensions of governance quality and the pace of economic growth in the EU-28. Based on correlation studies, out of the six analyzed dimensions of governance quality i.e. voice and accountability, political stability, government effectiveness, regulatory quality, rule of law and control of corruption, only political stability transpired not to be correlated to the level of GDP per capita in the studied economies. Practical Implications: The results are especially important for policy makers to understand the importance and the role of good governance. As for society, research results can increase awareness in assessing the quality of governance in each country. Originality/Value: The scientific results fill the gap in the research area of institutional quality of the public sector, and also show the significant relationship between the quality of governance and the economic outcomes (economic growth).

Purpose: The aim of the research is to build an index of fiscal illusion to assess the size of the problem in regards to the euro area countries in the period 2004-2016. Design/Methodology/Approach: The analysis of fiscal illusion phenomenon is based on critical analysis of public finance literature which helped in indicating the main sources of fiscal illusion and capturing its different dimensions. In addition, literature analysis enabled the selection of the most appropriate measures related to various aspects of illusion. Initially, the principal component analysis (PCA) was conducted to identify main factors which should be included in the formula of index. The selected factors were built on the basis of different measures and indicators that can be assigned to the selected dimensions of fiscal illusion. This allowed to construct the index of fiscal illusion. Findings: The authors noticed that economies characterized by a relatively high fiscal illusion and low quality of public finance may find it difficult to achieve fiscal sustainability in the long-term. In the analyzed period, the highest average value of the fiscal illusion index was recorded in Italy (the average FII 0,935), while the lowest in Estonia (the average FII 0,07). The results of the study revealed the significance of institutional determinants, which both influence the quality of public finance and the size of fiscal illusion. Practical Implications: The results are important not only for policymakers to understand the consequences of their decisions for public finance sustainability, but also for society, increasing its awareness of current tax burdens paid and benefits received. Originality/Value: The paper discusses the most important issues regarding fiscal illusion which seems to be obstacle in achieving public finance sustainability. The results of the research certainly enriched the existing knowledge on the phenomenon of fiscal illusion, its causes and ways of measurement.