Fiscal Crisis in the Transformation Period: Trends, Stylized Facts and Some Conceptual Problems

Abstract

The purpose of this study is to describe the separate stages of the transformation in light of the basic accompanying fiscal difficulties and to formulate general conclusions regarding the factors which substantially affect the state of public finances and the quality of fiscal policy in post-communist countries. The structure of the paper is as follows: Section 2 provides a synthetic classification of the post-communist economies according to their advancement in the transformation process; section 3 contains a proposed scheme for distinguishing successive stages of fiscal policy during the transformation period. In the following four sections, four such stages of fiscal policy are discussed. These are: initial destabilization, initial stabilization, secondary fiscal crisis, and finally, the restoration of fiscal potential. Section 8 is devoted to a group of countries which have not been able, so far, to achieve sustainable macroeconomic stabilization. Section 9 presents the issues concerning quasi-fiscal subsidies and the quasi- fiscal deficit. Section 10 contains a summary and concluding remarks.Poland, economic transition, fiscal crisis