ECONOMICS OF AUSTERITY AND FISCAL DEMOCRACY: INTERNATIONAL EXPERIENCE AND UKRAINE’S PROBLEMS
Journal Title: Економічна теорія та право - Year 2016, Vol 3, Issue 26
Abstract
Problem setting. Globally the economics of austerity has become the dominant economic model in the context of neoliberal logic of management. For Ukraine, in the conditions of multisystem multicauses instability, this model and policy carries a lot of risks and threats to its economy and society. The apparent ineffectiveness of austerity in Ukraine is caused by the political inability to formulate a clear program of action at the state level. Recent research and publications analysis. In the western scientific thought the hard debate has deployed between supporters of austerity policies that are building their arguments on the neoclassical and neoliberal positions (Alberto F. Alesina, Silvia Ardagna, Carmen M. Reinhart, Kenneth S. Rogoff, Jean-Claude Trichet), and its opponents, whose argumentation originates in Keynesianism and neo-Keynesianism (Paul Krugman, Mark Blyth Eugene Steuerle, Wolfgang Streeck, Daniel Mertens, Stanislaw Owsiak and others). Ukrainian scientific opinion on austerity policies is almost absent or is severely neo-liberal one with the dominant principle of «political expediency». Paper objective. The main objectives of the article are: firstly, to explain the initial causes of the austerity policies and such a phenomena as the economics of austerity; secondly, to conduct the comparative analysis of theoretical and practical principles of austerity policies of their advocates and opponents; thirdly, to explore the concept and some positive and negative results of economics of austerity (in the example of Ukraine and Poland); fourthly, to explain the essence of the «fiscal democracy», its practical role and results of its failing to the country’s development. Paper main body. The article observes the theoretical approaches and practical principles of austerity policies and, at the same time, causes of austerity economics formation. The author analyzes the alternative views on the austerity policies, such as neo-Keynesianism, neoclassic and neoliberalism. The author presents a comparative political and economic analysis of the positive and negative impact of discretionary policies to reduction of government spending on the economy. The essence of fiscal democracy is substantiated, causes of fiscal non-democracy in Ukraine are revealed, and results of financing of science are analyzed (in comparison with Poland). The proposals on the use of the positive potential of the economics of austerity as a policy for optimization and rationalization expenditures taking into account the real needs of the society for innovative development. Conclusions of the research. According to the neo-Keynesians, the austerity policies are ineffective ones with absence of the strategic action program, where some endeavor only to prevent the debt burden from reaching unsustainable levels, while others often want to stimulate the economy, when growth falls, but have no money. Adherents of the economics of proposition recommend to cut government expenditures, regardless none of them don’t answer the question, where in this situation must appear the economic growth, if the economy is «compressed». This is a model of a declining society. Formation of austerity economics can have a positive impact on the economy provided a more optimal use of available resources for innovative development, encourage investment in the development of science and education in the recession. The rationalization of public spending should be based on fiscal democracy, competition of social programs in their budgeting. Short Abstract for an article Аbstract. The article observes the theoretical approaches and practical principles of austerity policies and, at the same time, causes of austerity economics formation. The author analyzes the alternative views on the austerity policies, such as neo-Keynesianism, neoclassic and neoliberalism. The author presents a comparative political and economic analysis of the positive and negative impact of discretionary policies to reduction of government spending on the economy. The essence of fiscal democracy is substantiated, causes of fiscal non-democracy in Ukraine are revealed, and results of financing of science are analyzed (in comparison with Poland). The proposals on the use of the positive potential of the economics of austerity as a policy for optimization and rationalization expenditures taking into account the real needs of the society for innovative development.
Authors and Affiliations
Олександра Миколаївна Москаленко
Keywords
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- EP ID EP176269
- DOI Еconomics of austerity, government expenditures, policy of a
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