Comparison of the Redistribution Level and Structure of Functional Expenditure in the Visegrád Countries

Gábor P. Kiss
Chief Economist, National Bank of Hungary

Róbert Szemere
Economic Analyst, National Bank of Hungary

Published in: Public Finance Quarterly 2012/1 (p. 116-139.)

Summary: Our study aims to compare the level of redistribution, and expenditure structure of the Visegrád countries in the period between 1995–2010. For the purpose of comparability, the new methodology presented in the study filters out those components of total expenditures, which are exogenous in the short term from the perspective of economic policy makers. Of these, the most significant are the interest payments determined by the level of indebtedness and interest rates, tax payments within the general government, and EU subsidies running through the budget. Beyond this we defined a structural indicator for medium term expenditure developments, which filters cyclical effects from the corrected data, and also spreads the government’s capital expenditures out within the electoral cycle. The disaggregated figures highlight that compared to the other countries of the region, the excessive level of expenditure was increased by the growth of social expenditures in the period between 2002–2006 in Hungary. Afterwards, cuts were made to the additional expenditure by reducing public health care and general public services expenditure. The total adjusted Hungarian expenditure level fell short of the regional average in 2010. At the same time, Hungary had the highest level of social expenditures and the lowest level of healthcare expenditures in the region.

Keywords: redistributive effects, government expenditures, public health care, budget deficit, debt, functional expenditure structure, health care

Journal of Economic Literature (JEL) kód: H23, H5, I18, H6

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