Reduction In Government Expenditure Research Articles

Analiza wydatków rządowych w krajach Unii Europejskiej

This article analyses data on general government expenditure, at the level of the European Union (EU 28) according to the Classification of the Functions of Government – COFOG over the 2008-2017 period. Data shows that the expenditures increased at the beginning of the economic crisis in all EU countries, being followed by a slowdown in expenditures growth. All countries have adopted policies in order to reduce government expenditures towards the end of the period, aiming to increase their efficiency. Usually in high-income countries, compared with low-income countries, government expenditures are much larger as percent of gross domestic product (GDP), but the relations are not very strong though.

The economic effects of private social security accounts

Since the 1980s, over 30 countries have implemented various kinds of personal social security accounts. Most counties have adopted them as a part of their social security systems, to also continue to fund their public pay-as-you-go system. This paper analyses the effects of adopting private accounts, as well as the percentage of income paid into private accounts, on GDP per capita growth. Global panel-data regressions over time are used, as well as sample splits for developing countries and separately for Latin America, where many countries adopted some form of private accounts following Chile's ground-breaking example of a complete switch from public to private social security system. The paper estimates statistically significant effects of privatising parts or all of social security on countries' GDP per capita growth. Private accounts also benefit stock market growth and enrolment rates in secondary and higher education, as well as in reducing government expenditures and national debt.

The economic effects of private social security accounts

Since the 1980s, over 30 countries have implemented various kinds of personal social security accounts. Most counties have adopted them as a part of their social security systems, to also continue to fund their public pay-as-you-go system. This paper analyses the effects of adopting private accounts, as well as the percentage of income paid into private accounts, on GDP per capita growth. Global panel-data regressions over time are used, as well as sample splits for developing countries and separately for Latin America, where many countries adopted some form of private accounts following Chile's ground-breaking example of a complete switch from public to private social security system. The paper estimates statistically significant effects of privatising parts or all of social security on countries' GDP per capita growth. Private accounts also benefit stock market growth and enrolment rates in secondary and higher education, as well as in reducing government expenditures and national debt.

Local Government Bonds, Land Finance and Systematic Financial Risk

Local government debt plays an important role in promoting economic development, but with the continuous expansion of the scale of local government debt, coupled with the opacity of financial and debt information, local debt risk may be directly transformed into financial risk. Therefore, the potential mechanism of local government debt risk inducing systemic financial risk is studied to strictly control local government debt and prevent it at present. It is of great practical significance to mitigate systemic financial risk. At present, the research on local government debt mainly focuses on the mechanism of local government debt to amplify economic fluctuations, while the potential mechanism of local government debt risk to induce systemic financial risk is relatively few. From the perspective of local government bonds and land finance, the innovation of this paper is to depict the Chinese elements such as the maturity of local government bonds, the opacity of debt and financial information, and to integrate local government debt, land finance and financial intermediaries into the framework of general equilibrium to analyze the potential mechanism of systemic financial risk induced by local debt risk. This study finds that when the economy is facing negative productivity shocks, the decline in total output will inhibit the land demand of households and enterprises, and the decline in land prices caused by the decline in demand will reduce the land-related fiscal revenue of local governments. On the one hand, the decline of land-related fiscal revenue will reduce government expenditure; on the other hand, it will increase the pressure on local governments to repay debt and the risk of debt, which will lead to the rise of bond interest rates and the decline of bond prices. Lower bond prices will affect the balance sheet of financial intermediaries, resulting in increased leverage and risk premium of financial intermediaries. Under the balance sheet constraints, financial intermediaries will shrink corporate credit, resulting in an increase in systemic financial risk. Rising interest rates and tightening credit will restrain enterprises’ investment and land demand, further reduce total output and land prices, increase the debt risk of local governments, and form a financial accelerator mechanism in the economy, which will lead to the mutual reinforcement of the debt risk and financial risk of local governments and form a vicious circle. In addition, when financial risk rises, the default risk of local government debt is lower. Based on the trade-off between risk and return, financial intermediaries will hold more local government bonds. Credit squeeze brought by asset allocation changes will further strengthen the financial accelerator mechanism and strengthen the interaction between debt risk and financial risk. Meanwhile, although extending the bond maturity can reduce the pressure of local governments to repay their debt in the short term, the longer the bond maturity is, the greater the financial shock and economic volatility caused by local government debt risk are. The paper indicates that: for resolving local government debt risk and reducing the probability of systemic risk, we firstly need to improve the local government bond market, diversify local government bond investors, and change the current situation dominated by commercial banks; secondly, we should strengthen budget constraints and control the scale of local government debt; thirdly, we should rationally design the maturity structure of local government bonds, strengthen the transparency of local government finance and debt information, and play the role of market constraints; finally, when financial risk rises, the central bank can adopt non-traditional monetary policy to intervene in the market, which can reduce financial risk and social welfare losses.

DEPOSIT AND FINANCING INSTRUMENTS THROUGH WAQF BANK FOR FOSTERING REAL ECONOMY AND SOCIAL SUSTAINABILITY

During the global financial crisis and its aftermath, Islamic financial institutions were less affected, protected by their fundamental operating principles of risk sharing and the avoidance of leverage and speculative financial products. This has led to a greater appreciation of the role of Islamic finance in supporting economic growth across the globe. The contribution of Islamic finance and Islamic social finance especially through waqf sector promotes real economic development and could help to foster real economy and social sustainability.� The impact and contribution of waqf for economic development in fostering real economy and social sustainability can be obverved in many areas such as enhancing economic progress, eradicating proverty, restoring distribution of income, reducing government expenditure, preventing deficit financing and stimulate growth and job creation. Therefore, a new mechanism is needed to support non-bankable and poor customers for financing facilities via Shariah compliant Islamic financial products and services.The purpose of this paper is to examine the most feasible mechanism for deposit and financing instruments based on waqf through Waqf Bank that able to foster and stimulate economic and social sustainability in the real economy sector especially for Muslim countries. The methodology of research in this study is through qualitative research based on interviews with Muslim scholars as well as Islamic banking and waqf practitioners. The finding of this study shows that there is feasible mechanism and modus operandi for the development of deposit and financing instruments in the Waqf Bank that able to be applied in many Muslim countries worldwide.

The impact of fiscal shocks on real GDP and income inequality: What do Australian data say?

This paper examines the impact of three fiscal policy shocks on per capita real GDP and income inequality in Australia during the period 1965–2014. A small structural vector autoregressive (SVAR) model is constructed for an open economy for contemporaneous identification and estimation purposes. Based on the evidence of one cointegrating vector among the variables, a structural vector error correction (SVEC) model is specified for the long run. Direct taxation, indirect taxation receipts and government spending are identified as permanent fiscal policy shocks. The convergent use of two different models (SVAR & SVEC) strengthens the credibility of the results. The results have three key policy implications. First, a reduction in direct taxation receipts increases per capita real GDP without increasing income inequality. Second, a reduction in government expenditure significantly increases income inequality. Third, the adverse effect of indirect taxation receipts on income inequality is greater than the redistributive effect of government expenditure, which questions the widely held fiscal policy strategy of using indirect taxation to finance redistributive expenditure.

Grand Challenges Cannot Be Treated in Isolation

If not well understood, linkages among the grand challenges of poverty alleviation, environment protection, and climate mitigation could lead to paralyzed policies and even conflicting consequences. Quick changes need to happen at the institutional, societal, and scientific levels to maximize the synergy of addressing these challenges instead of treating them in isolation.

Social and economic aspects of the recent fall in global oil prices

Purpose The global energy market has been facing lower prices of crude oil in recent years. Lower fuel price leads to lower transport cost and cheaper agricultural inputs (such as pesticides and chemical fertilizer), resulting in lower prices of agricultural commodities in the international markets. On the other hand, lower global oil price reduces the oil revenues of oil exporting countries, resulting in a decrease in government expenditures. Therefore, the purpose of this study is to examine the impacts of lower global oil and agricultural commodity prices and government expenditure on the entire economy and poverty level of Malaysia. Design/methodology/approach This study used a computable general equilibrium model (CGE) to investigate four simulation scenarios based on the latest Malaysia’s input-output table belonging to 2010. The first scenario is a 30 per cent fall in the export and import prices of agricultural commodity prices, while the second is a 50 per cent decline in the export and import prices of crude oil, and the third combines them. In the fourth scenario, government operating expenditure declines by 4 per cent because of the fall in government’s oil revenues as a result of the decline in global oil prices. Findings The simulation results suggest that lower international oil price decreases real gross domestic product (GDP) and investment in Malaysia and influences positively the output and employment of some agriculture sectors. However, lower agricultural commodity price increases real GDP and investment in the country and negatively influences the output, employment and exports of all agriculture sectors. The decline in government expenditures also increases the output and the employment in the economy, whereas it decreases household consumption. In conclusion, results show that the agriculture sector losses from the current decline in international agricultural commodity prices, while it benefits from lower oil and government expenditure. Originality/value The main contribution of this study is comparing the impacts of recent falls in global oil and agricultural prices on the entire economy and agriculture sector of Malaysia. Investigating the impacts of these issues on the poverty level of Malaysian households is another contribution to the study. Another contribution is analyzing the impact of a reduction in government expenditures because of the decline in global oil price on the economy and welfare of Malaysia. Therefore, this study makes a useful contribution to the small literature of the topic.

The South African Government Vehicle Fleet must be Local

South Africa is fast approaching a “fiscal cliff” owing to rising government expenditure on civil service remuneration, social security grants and interest payments on government debt. The fiscal cliff is defined as the point where civil service remuneration, social security grants and interest payments on government debt account for 100 per cent of government tax revenue. Currently these three items account for some 70 per cent of the government’s tax revenue. The South African government has already increased the value-added tax (VAT) rate from 14 per cent to 15 per cent, but a reduction in government expenditure must also be considered to avert the fiscal cliff. Unnecessary government expenditure must, therefore, be identified and eradicated. One example where savings can be recorded is expenditure on imported vehicles purchased for the government vehicle fleet at central and provincial government level. These vehicles can easily be substituted by the purchase of locally-produced vehicles. Research in this paper shows that a policy of exclusive purchases of locally-produced vehicles for the government fleet at central and provincial government level would (based on 2017-figures) lead to fiscal relief, higher employment in the automotive manufacturing sector and a once-off positive economic growth impact for the South African economy. This matter has also found some support amongst members of Parliament.

Cost-benefit analysis of urban water supply and distribution scheme

In this study, cost-benefit analysis of Awka city water supply project was carried out considering current and projected water supply infrastructure. The result indicates benefit-cost ratios ranging from 0.3 to 0.5, meaning that there are between $1.90 and $3.36 of costs for every $1 in economic benefits. When these very low benefit-cost ratios are considered alongside the inconsistent and incomplete financial plans, it is clear that the proposed water supply project is not justified on an economic or financial basis. The study revealed that investments in the proposed water supply project would reduce government expenditure by over a period of twenty years.Keywords: water; supply; project; cost-benefit; analysis

When Do Municipal Consolidations Reduce Government Expenditures? Evidence on the Role of Local Involvement

Higher levels of government motivate municipal consolidations as a tool to increase efficiency in the local government sector, yet research shows consolidations typically fail to deliver the promised spending reductions. Since mergers often require significant changes to institutional structures, one potential explanation is that local decision makers can substantially influence the outcomes of the consolidations process. To explore this possibility, this paper contrasts “encouraged but voluntary” mergers with those that were “forced” on local governments in the state of New South Wales, Australia. Results show voluntary mergers resulted in a ten percent decline in total per capita expenditures, but forced consolidations failed to reduce spending across the board. The policy conclusion is decision makers considering structural reform should invest in obtaining the support and participation of local government decision makers.

When Do Municipal Consolidations Reduce Government Expenditures? Evidence on the Role of Local Involvement

AbstractHigher levels of government motivate municipal consolidations as a tool to increase efficiency in the local government sector, yet research shows that consolidations typically fail to deliver the promised spending reductions. Since mergers often require significant changes to institutional structures, one explanation is that local decision makers can substantially influence the outcomes of the consolidation process. To explore this possibility, this article contrasts “encouraged but voluntary” mergers with those that were “forced” on local governments in the state of New South Wales, Australia. Results show that voluntary mergers resulted in a 10 percent decline in total per capita expenditures, but forced consolidations failed to reduce spending across the board. The policy conclusion is that decision makers considering structural reform should invest in obtaining the support and participation of local government decision makers.

The Economic Effects of Private Social Security Accounts

Since the 1980s, over 30 countries have implemented various kinds of personal social security accounts. Most counties have adopted them as a part of their social security systems, to also continue to fund their public pay-as-you-go system. This paper analyzes the effects of adopting private accounts, as well as the percentage of income paid into private accounts, on GDP per capita growth. Global panel-data regressions over time are used, as well as sample splits for developing countries and Latin America, where many countries adopted some form of private account following Chile’s ground-breaking example of a complete switch from public to private social security system. The paper estimates statistically significant effects of privatizing parts or all of social security on countries’ GDP per capita growth. They also benefit stock market growth and enrollment rates in secondary and higher education, as well as in reducing government expenditures and national debt.

Relationship between Experts and Enterprises Viewed via the IFRS Application: An Empirical Study in Vietnam

In this research paper, the dominance of fiscal policy variables (government expenditure, total revenue, and total investment) on output in Bangladesh has been examined. The study embraces the output accounting framework where significant fiscal variables are considered that can influence economy robustly. The analysis is executed by using time series framework and holding yearly data from 1994 to 2017. The study uses augmented dickey fuller test (ADF) to check the unit root problem in the data. The result shows all data exempt unit root problem at first difference and Johansen cointegration test confirms at least two variables as cointegrated. The study applies vector error correction model (VECM) to find out both short run and long run relationship between gross domestic product, government expenditure, tax revenue and investment. No distinct relationship between any variable in the short run has been found. The result confirms a positive relationship between gross domestic product and tax revenue as well as investment. There exists a negative relationship between government expenditure and gross domestic product. The study recommends planning total tax revenue by strengthening and modernizing customs administration, tax exemptions, reducing government expenditure and inviting foreign investments.

Investigating Impact of Expansionary Fiscal Policy on Output in Bangladesh Economy: An Econometric Study

In this research paper, the dominance of fiscal policy variables (government expenditure, total revenue, and total investment) on output in Bangladesh has been examined. The study embraces the output accounting framework where significant fiscal variables are considered that can influence economy robustly. The analysis is executed by using time series framework and holding yearly data from 1994 to 2017. The study uses augmented dickey fuller test (ADF) to check the unit root problem in the data. The result shows all data exempt unit root problem at first difference and Johansen cointegration test confirms at least two variables as cointegrated. The study applies vector error correction model (VECM) to find out both short run and long run relationship between gross domestic product, government expenditure, tax revenue and investment. No distinct relationship between any variable in the short run has been found. The result confirms a positive relationship between gross domestic product and tax revenue as well as investment. There exists a negative relationship between government expenditure and gross domestic product. The study recommends planning total tax revenue by strengthening and modernizing customs administration, tax exemptions, reducing government expenditure and inviting foreign investments.

ПОЛІТИЧНА РЕКЛАМА: ДЕЯКІ ПРОБЛЕМИ ПРАВОВОГО ЗАБЕЗПЕЧЕННЯ

The article examines some issues of legal support of political advertising during the process of election, but is not limited to it, as well as how they affect the outcome of elections. In this study comparative, observation, dynamical analogies, analysis methods are used. The author compares the current legislation of Ukraine and the legislation of a number of other European countries and identifies their common and distinctive features. Special attention is given to the political advertising law of Poland, as its closest neighbour. Also, the legislation of France, Germany and Great Britain is examined. The article underlines their main differences. Partial and systematic violations of advertising legislation during the electoral process and during the period between the elections are also identified. The article also shows that the issue in question is not fully studied by legal scientists. The research, in particular, emphasises on the lack of comprehensive definition of political advertising and its legal regulation during the period between the elections. The article draws attention to the incorrectness in law legal regulation of political advertising by the laws regulating commercial advertising. The legal acts, that influence the results of elections are specified, in particular, the author pays attention to the state budget funding for political parties. Reducing Government expenditure can preserve the principle of absolute equality among political actors, so they could participate constructively in the elections. The best thing to do considering the circumstances is to adopt a new law on political advertising or to to amend the existing Act, that regulates advertising in general. As a result, it is proved that political advertising is not limited to the electoral process and must be governed by legislation. The article also states that any law in this area also should comply with international law, especially with acts adopted by the European Union.

Highway Project Value of Money Assessment under PPP Mode and Its Application

The application of Public-Private Partnership (PPP) mode in transportation infrastructure construction has achieved more progress worldwide; now this mode has been adopted in highway projects of China from 2015. In the application of PPP mode, there are three main facts in China, which include whether the government is responsible for land acquisition and resettlement (LAR), the discount rate changes, and the replacement of business tax by value-added tax (VAT) in 2016. So this paper discusses Value for Money (VFM) quantitative assessment of highway projects under PPP mode in China, which considers currently three actual issues in China. A case study of Heda freeway in China has shown that (1) the government’s responsibility for LAR compensation may attract social capital investor and reduce the risk of social instability, (2) a reasonable range of a low discount rate can greatly reduce government expenditure, and (3) the replacement of business tax by VAT will increase the highway project company’s burden. The research results will be helpful for value of money assessment of highway projects under PPP mode in China and may offer the reference for other countries’ highway projects under PPP mode.

Fiscal policy for households and public budget constraint in Italy

This study quantifies the economic impact of tax-cut policy implemented by Italian government on GDP and income distribution among institutional sectors. To this end, a computable general equilibrium model is calibrated on a social accounting matrix for Italian economy where households are disaggregated into five classes according to the income level. Two policy scenarios are simulated: the first considers an increase in transfers to the low-income households financed by a reduction in government expenditure; the second simulation considers a reduction in income taxes on low-income financed by an increase, of the same amount, in income tax on high-income households. The results of first policy scenario confirm the negative impact on GDP and disposable incomes of all institutional sectors except low income households. On the other hand, results of second policy scenario present the positive impact on GDP and disposable incomes of other institutional sectors.

The fiscal policy impact to the Greek economy: Asymmetric evidence from a switching regime approach

Abstract. This paper empirically investigates the magnitude of general government expenditures and tax income revenues to the Greek output within a regime-switching framework during the period 2000:1 – 2016:3. This nonlinear methodology captures the fiscal effects across periods of high and low growth. In more deep analysis, we examine the relationship of expenditures and GDP over time, by adopting the GARCH(1,1)-DCC methodology. Our results show that the magnitude of general government expenditures is larger during periods of low growth or economic recession, as well as the magnitude of tax income revenues. Furthermore, during the “bailout” period (2010-2016) when the fiscal adjustment was strict, GDP seem to be even stronger negatively affected by the reduction of government expenditures. Keywords. Fiscal policy impact, regime switching, GARCH-DCC, Greek economy. JEL. E61, E62, H21.

Oil Price Fluctuations and the Need for Tax Policy Reform in Qatar

This article considers the implications for Qatar of fluctuating oil prices, the problems that this raises regarding the balance between reducing government expenditure and the adverse effect on growth, and the need to use tax policy to stabilize the economy and diversify revenue and develop a more comprehensive tax system.