Fiscal instruments for reaching economic goals in Central and Eastern Europe

Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia are all countries in Central and Eastern Europe who had similar experiences on their way to economic and political transformation. All of them had to reform their economies as a consequence of the economic and political transformation. Their transition from the centralised to free-market economy entailed various social tensions and economic costs. However, they did not choose the same fiscal solutions to attain their economic goals. Each of the countries decided to apply its specific set of fiscal instruments to arrive at economic growth. Some of the new post-communist members of the European Union have already joined - and others aspire to join - the Euro zone, whose stability depends on compliance with the adopted fiscal criteria. All those developments give rise to questions about the most efficient fiscal solutions available to the national economies in the process of attaining the assumed economic goals. This paper presents results of an analysis of the choice and efficiency of the fiscal instruments applied in the Central and Eastern Europe countries in reaching the primary objective of any fiscal policy, which is to facilitate sustainable economic growth. Reprinted by permission of Vilnius University, Brno University of Technology, and University of Latvia