The cyclicality and development of government expenditure in the visegrad group

Abstract

The aim of the article is to provide direct empirical evidence on government expenditure in the Visegrad Group. Government expenditure plays important role in a fiscal policy of each country as a possible automatic stabilizer. Previously published studies are weakly supported by the data particularly in emerging and post-transition economies that’s why the analysis is focused on Visegrad countries. The article concentrates on development of total government expenditure, changes in the structure, and also on the cyclicality of government expenditure. We used annual data on government expenditure in compliance with the COFOG international standard during the period 1995 – 2009. GDP time series were cyclically adjusted. The results suggest that government expenditure and their allocation are similar in Visegrad Group despite the existing differences in the size of the public sector. On the other hand the cyclicality of government expenditure differs across the countries. Government expenditure is countercyclical only in the Slovak Republic, it is procyclical in other countries of the Visegrad Group.