Politická ekonomie 2020, 68(6):695-724 | DOI: 10.18267/j.polek.1300

Vplyv fiškálnych pravidiel na úroveň ekonomického rastu v monetárnych úniách

Matej Boóra
a Ekonomická univerzita v Bratislave, Národohospodárska fakulta, Bratislava, Slovenská republika

Impact of Fiscal Rules on Level of Economic Growth in Monetary Unions

The present paper deals with the impact of supranational fiscal rules on economic growth through optimal government size and the BARS curve in monetary unions. Monetary unions introduce supranational fiscal rules to ensure fiscal sustainability of public finance and to eliminate the presence of free-riders in these country groupings. The main objective of the paper is therefore to illustrate how compliance with the supranational fiscal rules affects the level of economic growth under the conditions of the existence of the BARS curve in monetary unions. The paper confirms the existence of the BARS curve. It makes a quantification of the optimal government size in the East African Monetary Union (26.96% of GDP) and a subsequent identification of years when supranational fiscal rules prevented increase in public expenditures via debt financing and thus counteracted the decline in economic growth.

Keywords: fiscal rules, monetary union, BARS curve, optimal government size, government debt, government deficit
JEL classification: E62, H11, H50

Received: February 28, 2020; Revised: October 29, 2020; Accepted: November 3, 2020; Published: December 21, 2020  Show citation

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Boór, M. (2020). Impact of Fiscal Rules on Level of Economic Growth in Monetary Unions. Politická ekonomie, 68(6), 695-724. doi: 10.18267/j.polek.1300
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