Fiscal Responsibility and Debt Sustainability. Preparedness for External Shock: The Case of the Czech Republic and Slovakia
Martin Zeman (),
Jan Kozak (),
Stepan Pekarek (),
Jan Vondracek () and
Miroslav Sevcik ()
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Martin Zeman: University of Economics, Prague
Jan Kozak: University of Economics, Prague
Stepan Pekarek: University of Economics, Prague
Jan Vondracek: University of Economics, Prague
Miroslav Sevcik: University of Economics, Prague
No 10913141, Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences
Abstract:
The article compares the development of the main government debt indicators in the Czech Republic and in Slovakia between 2014 and 2019 while evaluating their respective positions in at the beginning of the crisis caused by the spread of Covid-19 in early 2020. After a review of the characteristics and the nature of the external shock in comparison to previous crisis which took place from 2008 to 2009, the article discusses the preparedness of both economies for negative external shocks, primarily from the public finance perspective. The authors conclude that the Czech fiscal position is one of slightly higher overall preparedness to overcome possible economic problems than that of its Slovak counterpart. However, further assessment of the underlying tensions within Czech government deficit structure, past procyclical economic policy behavior and recent policy actions lessen the superiority of the Czech fiscal position and render both economies equally exposed to the negative effects of the coming crisis. In the current environment of uncertainity, it is difficult to establish a conclusive projection but the authors highlight the key risk areas for the medium-term horizon in the concluding discussion of the paper.Acknowledgment: The publication of this article was supported by the University of Economics, Prague research grant IGA no. IG504020
Keywords: Covid-19; Fiscal Policy; General Government; Debt Management; Business Cycle (search for similar items in EconPapers)
JEL-codes: E62 H63 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2020-07
New Economics Papers: this item is included in nep-mac
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Published in Proceedings of the Proceedings of the 13th Economics & Finance Conference, Prague, Jul 2020, pages 273-286
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Persistent link: https://EconPapers.repec.org/RePEc:sek:iefpro:10913141
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