No abstract

In this paper we evaluate the sustainability of the current fiscal policy regime in Poland, which has been in place for almost 10 years since the start of the economic reform process. We use the intertemporal budget constraint (IBC) as a framework, and evaluate the sustainability of current policies. Consistency of fiscal policy with the IBC is evaluated using unit root and cointegration tests. In contrast to much previous research on fiscal sustainability in western economies, we explicitly take account of the possible role of seignorage from money creation as a source of government revenue. Sustainability tests are conducted excluding and then including seignorage. We find firm evidence that Polish fiscal policy is sustainable, and that the fiscal regime is "expenditure-led", adjusting tax revenues to the planned levels of government expenditures. This would appear to bode well for Poland's prospective entry to the EU and possible subsequent consideration of membership of the monetary union.correspondence to:

No abstract

Purpose: The chapter identifies the complexities of Covid-19’s impact on the economy. The empirical part presents and assesses initial reactions of inflation, industrial production, unemployment rate, Gross Domestic Product (GDP) growth rate, and shifts in the GDP expenditure structure. Design/methodology/approach: Acomplete Keynesian macroeconomic model is used to outline how the negative shock hit the economies. The model shows potential implications of the use of reactive economic policy measures. Based on the model, the empirical part provides comparative analyses of reactions of four economies of the European Monetary Union (EMU) – namely France, Germany, Italy and Spain – two non-EMU economies of Hungary and Poland, and two major large open economies: the USA and Japan. Findings: The Covid-19 pandemic has sent a universal, global shockwave with asymmetric outcomes in individual economies. Covid-19 hit all economies and struck both the demand side and – after ashort time lag – the supply side. Although interconnected, the economies have maintained notable structural differences and, therefore their autonomous reactions to negative demand and supply shocks were diverse. Practical implications: The complete macroeconomic Keynesian model allows for the conceptualization of the transmission of the Covid-19 shock on the economy’s supply and demand sides. The model is also a helpful tool in the analysis of the potential role of economic policy in reaction to the supply and demand shocks triggered by the pandemic. Originality and value: The empirical analyses unveil the eight economies’ differentiated reactions to similar counter-crisis policy measures. Their scale in all cases pushed the state back to the center of economic life. This structural shift requires attention and systematic theoretical and empirical studies.

No abstract