Konsolidacja fiskalna w krajach Unii Gospodarczej i Walutowej w warunkach kryzysu zadłużenia
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FISCAL CONSOLIDATION IN THE ECONOMIC AND MONETARY UNION COUNTRIES IN THE TIME OF DEBT CRISIS
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The aim of this article is to present an idea of fiscal consolidation and its methods, used in Member States of the Economic and Monetary Union (EMU) and to point out the benefits and costs of fiscal consolidation. The article also analyzes and assesses the main effects of fiscal consolidation policies in EMU countries in the time of debt crisis. Fiscal consolidation is a policy which strengthens public finances by reducing government deficit. In EMU, the level of budget deficit is limited to 3 percent of GDP. If deficit exists for a long time, the state of public finances is harmed. Euro area countries have used three different methods of fiscal consolidation, i.e. by increasing public incomes, by reducing public expenditures and by using a mixed method. Despite the fact that the fiscal consolidation weakens economic growth in the short term, it limits the possibility of degradation of public finances in the long term. The postponed effects of financial and economic crisis which took place from the year 2007 to 2009, have caused the fact that the risk of insolvency has risen up significantly in some EMU countries. Since the first half of 2010, in order to defeat public finance crisis, the Member States have introduced fiscal consolidation programs. These programs are to reduce public expenditures and increase tax incomes. Taken actions have caused inter alia a fall in a budget deficit level and stabilization in public debt level in the EMU. Besides these facts, some Members still have to take further reforms, making their decisions on the provisions having its grounds in the modified Stability and Growth Pact.
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