The impact of social expenditure on public debt in the Czech Republic and Slovakia
Loading...
Date
Journal Title
Journal ISSN
Volume Title
Publisher
Technická Univerzita v Liberci
Technical university of Liberec, Czech Republic
Technical university of Liberec, Czech Republic
Abstract
Europe is facing the problem of growing consumption and increasing volume of public expenditure too for years. Financing of public expenditure (as a sum of short-term, medium or long term projects) is a complicated issue. Regarding the financial perspective, the primary result is the creation of budget deficits. Countries are currently not able to deal with them, and thus this problem leads to the creation of new deficits. Therefore, an economy creates public debt – through the accumulation of deficits. The aim of our paper is to examine the effect of social expenditure on public debt. We have focused on the examination of only two countries – the Czech Republic and Slovakia. Our findings confirm that social expenditure represents a significant proportion of public expenditure. Moreover, public expenditure and social expenditure as well have increased in volume in the previous years. Governments use them to fulfil their social role in the economy. From this perspective, financing of social expenditure also contributes to the deficit, and in the long term to the creation of public debt. For that reason, another objective of our paper is to verify the effect of social expenditure on public debt. We examine the primary hypothesis on the significant correlation between public expenditure and public debt. As a result, we created an econometric model to test our hypothesis that the variable of public expenditure is more significantly correlated with public debt than other selected economic variables. Moreover, we modified the model, and we tested the hypothesis that social expenditure is more significantly correlated with public debt than other selected economic variables. We found that hypothesis concerning public expenditure had been confirmed for both countries. Hypothesis about social expenditure was confirmed for the Czech Republic. However, in the case of Slovakia, this hypothesis could not be verified.
Description
Subject(s)
public debt, population ageing, social expenditure, Slovakia, the Czech Republic
Citation
ISSN
12123609