Patterns of Government Expenditure and Taxation in Transition vs. OECD Economies

This study identifies systematic determinants of some key budgetary aggregates in transition and OECD economies. Because of the lack of theory on public expenditure, the study is empirical. We use three approaches: regression analysis, non-parametric efficiency analysis, and construction of a budget set and a preference set. The revealed empirical regularities help to explain a number of short-term difficulties of budgetary policy in transition countries, and thus tightens the still fragmentary definition of transition. The study also identifies some structural challenges for the long-term sustainability of budgetary and policy choices in transition economies