Transcript Document

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