Publication details

Budget Deficit in the Public Choice Perspective



Year of publication 2007
Type Appeared in Conference without Proceedings
MU Faculty or unit

Faculty of Economics and Administration

Description In the last years, we can observe the trend of fiscal deficits in the most post-transitive countries and also in advanced economies. These imbalances even often persist for couple of years, consequently rising up the level of public debt. In the public choice theory, we are envisaged with rational individuals who form political decision-making (and that means fiscal policy as well) and who act in collective decision-making process according to the same principles as they do in the economic exchange in the free market. How could than these individuals agree with such development in the public finance area? Could the deficit financing of public expenditures be considered as rational? The submitted presentation shows, that the debt financing of collective goods can be reasonable, similarly as consumption smoothing in the realm of private choice. Anyway, the presentation also deals with consequences of such rational decision-making, especially with the consequent problems with public debt. The attenton is also focused on the specifics of the transition economies (especially in the Central Europe) and their impacts on the decicsion-making in the public finance area.
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