Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Theme 6 - Public Expenditures “The only good budget is a balanced budget.” (Adam Smith) 1 Structure of lecture • Public expenditures • System of public budgets • State budget 2 Public expenditures Public Expenditures •Government •Expenditures (G) •Transfers (Tr) 3 Private and Public sectors Consumption (C) Investment (I) Private sector T (Taxes) Tr Transfers) Public Sector G Gov. consumption (CG) Gov. Investment (IG) 4 Public expenditures classification Public expenditures can be split into two groups: • Current expenditures for: – goods and services, – interest payments, – subsidies, – transfers. • Capital expenditures. 5 Macro-economic aspects of public expenditures • Public expenditures are important part of total incomes and expenses. • Public expenditures for goods and services (G) = an important part of AD. – Remember? AD (aggregate Demand)= Agg.Expenditure =C + IG + G + Xn • Trends of G influence employment and production in the economy. • G could work as multiplier▼ in fiscal policy. 6 Public expenditures are growing „The public sector grows with increasing income per capita“ Alfred Wagner (1835 – 1917) 7 Factors influencing growth of public expenditures • demographic factors: – shift from self-sufficiency on farm with large family to urban mutual dependence, – age structure changes, – etc. • threshold effect, • inflation trends (higher costs for goods and services), • technological changes (increased labour productivity), • production volumes growth – increase of incoming taxes, • increasing consumption, • political and social influences, • etc. 8 Demographic factors: Population structure in the CR by age group and sex in 1930 85+ 80-84 75-79 •men women 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 9 Population structure in the CR by age group and sex in 1990 •men women 10 11 12 13 • Size of the public sector as % of GDP • % 70 SWE. FR. ITAL. AUT. GER BELG. 50 U.K. NOR. CAN. JAP. AUST. USA 30 •6 000 • 8 000 • 10 000 • 12 000 • 14 000 GDP per capita 14 15 Substitution Effect of Public Expenditure (Commodity Subsidy) X1,X2 – consumption of good X before and after subsidy Y1,Y2 – consumption of good Y before and after subsidy I1,12 Budget Lines U1, U2 Indifference Curves Income Effect of Public Expenditure (Income Subsidy) X1,X2 – consumption of good X before and after subsidy Y1,Y2 – consumption of good Y before and after subsidy I1,12 Budget Lines U1, U2 Indifference Curves State budget expenditures ► are the transfers and purchases of goods and services. Transfers = financial flows from state budget to individual subjects (firms and households). • Transfers to households: Social insurance, childern allowances, unemployment allowances etc. • Transfers to firms: Capital and non-capital subsidies. Govermental purchases of goods and services: capital and non-capital. Subsidies; 59; 5% Interest expenditure; 34; 3% Capital formation; 138; 11% Other; 45; 4% Collective consumption; 311; 25% Social transfers; 639; 52% 18 State budget expenditures items 1. social expenditures 2. education 3. administration (civil service) 4. highway 5. local governments 6. defence expenditures 7. security 8. housing 9. health service 10. support of agriculture and forest 11. personal railage 12. governmental reserve 13. culture 14. subsidies on heating 19 1,200,000 1,000,000 Growth of Expenditures of Central Government of the Czech Republic, 1998 – 2012 (in thousands CZK) 800,000 600,000 400,000 200,000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Skutečné výdaje celkemreal (v tis. Kč) v(1998) cenách roku 1998 Total Expenditures, prices Skutečné výdaje MPSV (v tis.prices Kč) v cenách Social Expenditures, real (1998)roku 1998 Skutečné Educational výdaje Expenditures, MŠMT (v tis. Kč) realv prices cenách(1998) roku 1998 Total Expenditures, prices Skutečné výdaje celkemcurrent (v tis. Kč) v běžných cenách Social Expenditures, current Skutečné výdaje MPSV (v tis. Kč)prices v běžných cenách Educational Expenditures, current pricescenách Skutečné výdaje MŠMT (v tis. Kč) v běžných Ratio of Public Expenditures to GDP, Czech Republic and EU27, 1998 – 2012 (in %) 60 50 40 30 20 10 Průměr za Evropskou unii (27 EU27, average států) Czech republika Republic Česká 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012