The Quality of Public Finance in the Countries of South-East Europe

Abstract

The subject of this research is to analyze a number of factors that impact the quality of public finances in the selected post-socialist South East countries (SEE). In the theoretical part of the paper we have selected and analyzed the factors (variables). The following key factors of influence (as independent variables) were included: socialist heritage, politicization as an abuse of macroeconomic policies, instability of institutional environment, human capital deficits in the area of public finances, and financial accountability deficits.In the quantitative part, the level of selected factors was assessed on the quality level of public finances in the observed countries. The hypothesis was that the factors selected had a very significant impact on the quality of public finances.Mathematical model based on multiple linear regression analysis was created in order to explain the functional relationship between the dependent variable: the quality level of public finances and the selected independent variables. The goal is to estimate the expected mean of the dependent variable (Y) based on individual estimates of the respondents.Regarding the respondent's perception, the Likert scale (1.0, 0.5, 1. 0, 1.5, 2.0, 2.5, 3.0, 3.5, 4.0, 4.5, 5,0) was used, where 1.0 indicates the lowest impact and 5.0 indicates the highest impact. Based on their best knowledge, experience, and (or) intuition, the respondents were asked to assess the dependent variable in the model and independent variables. The empirical data obtained, qualitative and quantitative, have confirmed the hypothesis.

Supreme Audit Institutions and Sustainability of Public Finance. Links and Evidence along the Economic Cycles

“…To shape a profile of public finances in South-Eastern Europe, Vukčević and Jovović [30] studied the link between the quality of public finance and a set of variables, such as socialist heritage, politicization as an abuse of macroeconomic policies, instability of institutional environments, human capital deficits in the area of public finances, and financial accountability deficits. The authors underlined that financial sustainability should be based on a sustainable fiscal framework, strategic planning, and budgeting of expenditures.…”

“…fiscal consolidation, as such, contributes to the stabilization of key macroeconomic aggregates [1,31]; -institutions play a key role (inevitable and a priority) in economic and social development [32][33][34]; -countries with weak institutional structures are more vulnerable to a crisis, also measured by a decline in production and by other economic indicators [30]; -weak institutions are sensitive to shocks, which could make collaboration among decision-makers hard to achieve [35].…”

Analysis of the Impact of Macroeconomic Stability on the Level of Global Competitiveness of Western Balkan Countries

“…The excess labour force in the government apparatus puts a heavy burden on public finances and leads to an increase in the budget deficit. Improving the quality of the public financial management is also one of the preconditions for better cooperation with the European Union (Vukčević & Jovović, 2020). Tax evasion has a markedly negative impact through reducing the amount of funds on the revenue side of the budget (Risteski, 2009).…”