No abstract

In the aftermath of the global recession, the need for fiscal consolidation in order to reduce budget deficits and the public debt has intensified, but with the aim to make the measures applied not affect the further slowdown of the economic activity in the European Union (EU) economies. In this paper, the episodes of the fiscal consolidation in the period from 1990 to 2015 in the 28 EU economies are analyzed, differentiating the multiyear episodes against the one-year (i.e. cold shower) episodes and their effects before and after the global recession. The episodes of the fiscal consolidation that result in successful (a reduction in the cyclically-adjusted primary budget deficit) and expansionary effects (the GDP growth) are identified, thus empirically confirming the existence of non-Keynesian effects. The stated affirms the idea that the achievement of fiscal sustainability by using austerity measures does not necessarily imply contractions in economies and that the development of a fiscal architecture in the EU by establishing complementarity between the national and supranational fiscal rules is of extraordinary importance in the post-crisis period.

This paper analyses the effectiveness of bail-out mechanisms after the global crisis in comparison to Covid-19 pandemic crisis in the selected Eurozone economies. It seems that in the circumstances of global instability, laissez-faire rules in economy are not enough, meaning that government interventions are desirable and unavoidable. In the Eurozone, the implementation of bail-out programs is related with the problem of a new "impossible trinity" and no-bail out clause. However, the adopted clause on non-use of the bail-out mechanism has had to be ignored several times in the past, and those implementations of bail-outs are focus of this paper. The research is based on descriptive statistical analysis and fixed panel model specification using available data in relation to the bail-out programs in the period 2011-2020 in selected Eurozone economies. The research shows that governments appear to have learned at least three lessons from the global crisis in relation to the bail-out mechanisms: (a) the need for quick implementation of emergency measures, (b) the bail-out mechanism was effective in reducing the fiscal deficit, however, caused an increase in the public debt, and (c) strengthening the fiscal framework of the Eurozone economies by defining supranational fiscal rules remains the essence of a stronger Eurozone and the European Union.

This paper empirically investigates heterogeneous effects of different public policies (health, educa tion, pension expenditure) on fiscal deficit in the circumstances when fiscal sustainability became questionable in EU economies. The research is based on the sample of EU-28 over the period 1995 2015. The empirical analysis is conducted within the econometric framework of heterogeneous, cross sectional dependent panels, using common correlated effects approach. According to the main findings of the paper, different effects of public policies between groups of developed and emerging European economies are evident but not crucial. These effects on fiscal deficit are heterogeneous across all coun tries, with different magnitude of pension, health and education expenditure impact. Due to the popula tion ageing, pension expenditure has the most frequent and the most intensive influence on fiscal defi cit deepening, following by education expenses. It means that policymakers are facing with trade-off related to old/young population, and that they are mostly oriented toward old population (voters).

The aim of this paper is to point out the limitations of conventional approaches, articulated via political processes, in reducing income inequality. Using the panel data methods, on the sample of 21 affluent OECD countries in the period from 1980 to 2011, it is observed that the increase in labour productivity as well as preferences of voters to parties that advocate greater redistribution, contrary to common perception, not necessarily lead to reduction in income inequality. Increasing dominance of big capital in the field of technological progress changes the conventions about contribution of workers to labour productivity. The result is a weakening of workers' bargaining power in relation to employers as well as increase in gap between labour productivity growth and real wage growth, which both lead to increase in income inequality. In comparison with the other political parties, it seems that the right-wing parties are more efficient in using voters' support to implement their concept of the welfare state, which contributes to maintaining the high market-generated income inequality. Such situation could be explained that de jure power of the government depends on election results, whereas de facto power depends on the support of so-called globally-oriented super elites.