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Special Issue "Fiscal Policy, the Theory and its Role in a Future Sustainable Economy Development"

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A special issue of Sustainability (ISSN 2071-1050). This special issue belongs to the section "Economic and Business Aspects of Sustainability".

Deadline for manuscript submissions: closed (22 August 2021).

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Special Issue Editor

Prof. Mihaela Onofrei
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Guest Editor

Vice-rector for student activities and economic partnerships with the public sector, Alexandru Ioan Cuza University of Iaşi, 11 Carol I Boulevard, Iaşi, Romania
Interests: financial management; public administration; sustainable development
Special Issues and Collections in MDPI journals

Special Issue Information

Dear Colleagues,

The general goal of achieving a sustainable economy development relies very much nowadays on the public authorities’ capacity to conceive and implement effective, result-oriented policies in various domains. By offering adequate incentives or using counteracting measures related to real economy, governments can shape the future development of a country, in accordance with its general interests. As a core component of the governmental interventions, fiscal policy offers to public authorities the instruments to influence their countries development path and growth rate, being often associated in debates with countries economic performance and sustainability. At the same time, aspects as tax harmonization, tax competition or fiscal discipline exceeded the national framework of discussion, becoming constant topics on the public agenda. In addition, even global goals are reliant on sound fiscal policy, capable to reduce poverty and inequalities, to sustain good health and well-being.

We encourage empirical contributions discussing the impact of fiscal policies on sustainable economy development, as country studies or international comparisons.

Appropriate topics include, but are not limited to:

The impact of tax policies on sustainable economy development
The impact of public expenditures policies on sustainable economy development
The effect of public debt on sustainable economy development
Fiscal harmonization vs Fiscal competition
Fiscal responsibility and Governance quality
Disparity Reduction as a Strategy for sustainable economy development
Fiscal Policy and the Stock Market

This Special Issue of Sustainability invites scholars to submit novel theoretical, methodological, and empirical research papers subject to a highly rigorous peer-review before publication.

Prof. Mihaela Onofrei
Guest Editor

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All papers will be peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Sustainability is an international peer-reviewed open access semimonthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1900 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

fiscal policy
tax policy
tax reforms, public expenditure policies
deficit and debt policy
sustainable economy development

Published Papers (13 papers)

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Research

Open AccessArticle

Impact of Tax Incentives on Foreign Direct Investment: Evidence from Africa

Seth Nana Kwame Appiah-Kubi

and

Sustainability 2021, 13(15), 8661; https://doi.org/10.3390/su13158661 - 03 Aug 2021

Viewed by 470

Abstract

African countries have faced competition and several challenges to attract foreign direct investment given the role that FDIs play in the development process. Several efforts made have been futile because of numerous factors that play against the business environment for foreign investments. Our paper analyses the influence of tax incentives on foreign direct investment in African economies based on data from 2000–2018. We utilized panel data on forty (40) African countries and an econometric model of four proxies of tax incentives, after controlling other variables, with robust Random Effect as our discussion estimator. Our results revealed that FDI responds to lower corporate income tax (CTR). Furthermore, foreign direct investment predominates in African economies with longer tax holidays and withholding tax. However, tax concession is insignificant to the inflows of FDIs in Africa. Summarizing, our results recommend that without proper restructuring of the tax incentives to deal with policy lapses by the governments of Africa, achieving the four main goals, i.e., poverty eradication, sustainable growth and development, African integration in the competitive global economy, and women empowerment, will be hindered. Full article

(This article belongs to the Special Issue Fiscal Policy, the Theory and its Role in a Future Sustainable Economy Development)

Open AccessArticle

Can the New Energy Vehicle Pilot Policy Achieve Green Innovation and Emission Reduction?—A Difference-in-Differences Analysis on the Evaluation of China’s New Energy Fiscal Subsidy Policy

Susheng Wang

Gang Chen

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Dawei Huang

Sustainability 2021, 13(15), 8643; https://doi.org/10.3390/su13158643 - 03 Aug 2021

Viewed by 403

Abstract

Whether the new energy vehicle pilot policy (NEVPP) can achieve green innovation and emission reduction is an important exploration for China to achieve green and sustainable development. This research aims to empirically investigate the impact, impact mechanism, and heterogeneity characteristics of the NEVPP on urban green innovation and emission reduction based on panel data from 281 cities in China from 2004 to 2017, using difference-in-differences (DID) methods and fixed effect (FE) models. The results show that the NEVPP significantly reduces the carbon dioxide emissions of the pilot cities but significantly inhibits the green innovation, and the results are robust to the placebo test, propensity score matching DID (PSM-DID) test, instrumental variable (IV) estimation, emissions trading system (ETS), and Carbon-ETS interference test, and change of the dependent variable. In addition, further studies have shown that the NEVPP’s emission reduction effects are mainly achieved by reducing energy consumption, promoting technological innovation, and adjusting industrial structure. Moreover, we found that the NEVPP performed better in the regions where the level of economic development is high, the local government has a good relationship with the market, and the level of non-state economic development is high. In general, our research results show that the NEVPP has achieved innovation and emission reduction policy effects in China, but it is also accompanied by an inhibitory effect on green technological innovation. Full article

(This article belongs to the Special Issue Fiscal Policy, the Theory and its Role in a Future Sustainable Economy Development)

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Open AccessArticle

An Assessment of the Relationship between Defence Expenditure and Sustainable Development in the Baltic Countries

Gitana Dudzevičiūtė

Svajone Bekesiene

Ieva Meidute-Kavaliauskiene

and

Galina Ševčenko-Kozlovska

Sustainability 2021, 13(12), 6916; https://doi.org/10.3390/su13126916 - 19 Jun 2021

Viewed by 483

Abstract

As geopolitical instability increases and new threats emerge, a number of countries are increasing their respective allocations for defence expenditure in order to take greater responsibility for their citizens in terms of defending and protecting their values and way of life. Small states such as Lithuania, Latvia, and Estonia must evaluate certain economic, political, and strategic factors when increasing their respective defence expenditure. While they do tend to increase expenditure on national defence matters, budgetary constraints often force them to cut funding in some civilian domains or to increase their borrowing on international markets. Therefore, the security and defence of small states must be addressed in an integrated way, taking into account economic, social, and environmental factors. The aim of this article is to assess the relationships between defence expenditure and sustainable development indicators during the period between 2000 and 2018 in the Baltic states. The authors of this article aimed to determine which sustainable development indicators have a significant impact upon a country’s expenditure when it comes to defence matters. The study was conducted using econometric methods, including Spearman’s correlation analysis and Automatic Linear Modelling (ALM). The research results revealed some differences amongst the Baltic countries. In Lithuania, the employment rate and R&D personnel as a share of the active population demonstrated a significant impact upon defence expenditure. In Latvia, defence expenditure was found to be affected by disposable household income per capita and environmental taxes as a share of total tax revenue. In Estonia, defence expenditure was mainly influenced by disposable household income per capita and energy import dependency. The study’s findings may be used to ensure both the security of the country and the implementation of the Sustainable Development Goals. Full article

(This article belongs to the Special Issue Fiscal Policy, the Theory and its Role in a Future Sustainable Economy Development)

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Open AccessArticle

The Impact of Corruption and Rent-Seeking Behavior upon Economic Wealth in the European Union from a Public Choice Approach

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Sustainability 2021, 13(12), 6870; https://doi.org/10.3390/su13126870 - 17 Jun 2021

Viewed by 488

Abstract

The current paper evaluates the impact of corruption and rent-seeking behaviors upon economic wealth in the European Union states using a public choice approach. The period of study is 2000 to 2019. To measure this impact, the present study uses a regression with variables reflecting governance quality and considered relevant, from a public choice approach, to corruption and rent-seeking. The main results of this study show a negative relationship between the level of corruption and economic wealth for all analyzed countries, especially for the ones that compose the new member states group. For all the EU member states, the variables capturing governance quality seem to have a positive impact on economic wealth. The higher levels of governance performance, synonymous with lower levels of rent-seeking, personal interest, and political pressures on state administrations, contribute to economic wealth, as public choice theory emphasizes. There is a need for reform and an increase in the efficiency of public institutions, especially in new member states. Full article

(This article belongs to the Special Issue Fiscal Policy, the Theory and its Role in a Future Sustainable Economy Development)

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Open AccessArticle

The Nexus between Sustainable Economic Development and Government Health Expenditure in Asian Countries Based on Ecological Footprint Consumption

Durdana Qaiser Gillani

Syed Ahmad Saad Gillani

Muhammad Zahid Naeem

Cristi Spulbar

Elizabeth Coker-Farrell

Abdullah Ejaz

and

Ramona Birau

Sustainability 2021, 13(12), 6824; https://doi.org/10.3390/su13126824 - 16 Jun 2021

Viewed by 471

Abstract

Health has vital importance in maintaining economic development since it is essential for, and a result of, economic development. This indicates that health makes a large contribution in achieving sustainable development and health outcomes. The significance of health is shown in the millennium development goals (MDGs) and in the sustainable development goals (SDGs), where four of the seventeen objectives focus on improving health outcomes (UN, 2021). As compared to other countries, some Asian countries are still worse off regarding health outcomes and are facing challenges in achieving positive outcomes for such goals. This study mainly focuses on identifying the link between public health expenditures and health outcomes in nine Asian economies from 2000 to 2018. The study implements fixed effects panel data estimations by using the Hausman specification test to identify the fixed effects model as the suitable estimator for the study. The empirical results from the fixed effects technique show that immunization, GDP per capita, trade openness, and utilization of basic water service facilities improve under-five and infant mortality in Asian economies. However, ecological footprint increases under-five and infant deaths by damaging the environment. Full article

(This article belongs to the Special Issue Fiscal Policy, the Theory and its Role in a Future Sustainable Economy Development)

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Open AccessArticle

Government Spending and Economic Growth: A Cointegration Analysis on Romania

Cristian C. Popescu

and

Laura Diaconu (Maxim)

Sustainability 2021, 13(12), 6575; https://doi.org/10.3390/su13126575 - 09 Jun 2021

Viewed by 556

Abstract

The purpose of our study is to identify the nature of the link between government spending and economic growth, in order to test the two theories of Wagner and Keynes, in the case of Romania. On the one hand, Keynes argues that public spending is an important tool to stimulate growth. On the other hand, Wagner says that increased public spending is a result of economic growth. We analyzed the long-term dynamics of the two time series through Johansen’s cointegration approach and, in the short term, with the help of Granger’s causality test. The obtained results do not indicate the existence of long-term cointegration vectors, but they support the double causality relation in the short term. Therefore, not only does GDP represent a Granger cause for government spending but also vice versa. Our results validate the liberal criticism of the state’s involvement in supporting economies. As the critics of the monetarist school said, the effect of multiplying government spending on national income is short-term. The long-term effect appears under the action of inflationary macroeconomic bottlenecks. Full article

(This article belongs to the Special Issue Fiscal Policy, the Theory and its Role in a Future Sustainable Economy Development)

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Open AccessArticle

Effects of Digitalisation on Higher Education in a Sustainable Development Framework—Online Learning Challenges during the COVID-19 Pandemic

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Sustainability 2021, 13(11), 6444; https://doi.org/10.3390/su13116444 - 05 Jun 2021

Cited by 1 | Viewed by 957

Abstract

Throughout the planet, the medical challenges posed by the pandemic caused by the SARS-Cov-2/COVID-19 coronavirus have overlapped, inter alia, with the necessity to continue the academic process on every level. Romania was no exception. With the new vaccines against COVID-19, the hope of resuming face-to-face activity, considered as ‘normal’ before 2020, has emerged. In these circumstances, not at all far-fetched, certain questions have arisen, such as: should and must the online university education be completely removed? Should this form of education be continued? If so, to what extent? We have used econometric methods related to ARDL (auto regressive distributed lag models) such as pooled mean group (PMG) and mean group (MG) and used different tests for unit roots for the stationarity check of the series implied. The results show the positive effect of digitalisation on tertiary education and also the positive impact of the latter on sustainable development, as a base for future stimulation in public policies. The present study also aims to harness the university experience of these times, from some of the main Romanian university centres; the method used was a quantitative and qualitative research based on a questionnaire, which was answered by a number of 258 university teachers and 1569 students from prestigious public and private universities. The results of this analysis allowed us to conclude that most of the participants in the university educational process have adapted to the online activity, and the latter ‘saved’ the academic years 2019–2020 and, respectively, 2020–2021. The present study is useful for tertiary education institution and policymakers in terms of formulating strategies and policy recommendations to support teachers and students during any future pandemics. Full article

(This article belongs to the Special Issue Fiscal Policy, the Theory and its Role in a Future Sustainable Economy Development)

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Open AccessArticle

Influence of Fiscal Policies and Labor Market Characteristics on Sustainable Social Insurance Budgets—Empirical Evidence from Central and Eastern European Countries

Adriana Florina Popa

Stefania Amalia Jimon

Delia David

and

Daniela Nicoleta Sahlian

Sustainability 2021, 13(11), 6197; https://doi.org/10.3390/su13116197 - 31 May 2021

Viewed by 599

Abstract

Social protection systems are a key factor for ensuring the long-term sustainability and stability of economies in the European Union, their reform being nowadays present in the political agenda of member states. Aging and the dependence on mandatory levies applied to the employed population on the labor market represent a threat for the sustainability of public social protection systems. In terms of sustainability, our purpose was to highlight the factors influencing social insurance budgets, considering the fiscal policies implemented in six countries of Central and Eastern Europe and their particular labor market characteristics. Therefore, a panel study based on a regression model using the Ordinary Least Squares method (OLS) with cross section random effects was used to determine the correlations between funding sources and labor market specific indicators. The data analyzed led to relevant results that emphasize the dependence of social insurance budgets on positive factors such as the average level of salaries, the share of compulsory social contributions, the unemployment rate, and the human development index, suggesting the continuing need for professional and personal development of the workforce. Full article

(This article belongs to the Special Issue Fiscal Policy, the Theory and its Role in a Future Sustainable Economy Development)

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Open AccessArticle

The Dynamic Impact of Agricultural Fiscal Expenditures and Gross Agricultural Output on Poverty Reduction: A VAR Model Analysis

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Sustainability 2021, 13(11), 5766; https://doi.org/10.3390/su13115766 - 21 May 2021

Viewed by 438

Abstract

China was the first developing country to achieve the poverty eradication target of the 2030 Agenda for Sustainable Development Goals (SDG) 10 years ahead of schedule. Its past approach has been, mainly, to allocate more fiscal spending to rural areas, while strengthening accountability for poverty alleviation. However, some literature suggests that poor rural areas still lack the endogenous dynamics for sustainable growth. Using a vector autoregression (VAR) model, based on data from 1990 to 2019, we find that fiscal spending plays a much more significant role in reducing the poverty ratio than agricultural development. When poverty alleviation is treated as an administrative task, each poor village must complete the spending of top-down poverty alleviation funds within a time frame that is usually shorter than that required for successful specialty agriculture. As a result, the greater the pressure of poverty eradication and the more funds allocated, the more poverty alleviation projects become an anchor for accountability, and the more local governments’ consideration of industry cycles and input–output analysis give way to formalism, homogeneity, and even complicity. We suggest using the leverage of fiscal funds to direct more resources to productive uses, thus guiding future rural revitalization in a more sustainable direction. Full article

(This article belongs to the Special Issue Fiscal Policy, the Theory and its Role in a Future Sustainable Economy Development)

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Open AccessArticle

Taxation and Enterprise Innovation: Evidence from China’s Value-Added Tax Reform

Ke Ding

Helian Xu

and

Rongming Yang

Sustainability 2021, 13(10), 5700; https://doi.org/10.3390/su13105700 - 19 May 2021

Viewed by 518

Abstract

This article used China as an example to study how tax reform affects the innovative behavior of companies. Our research showed that value-added tax (VAT) reform can affect corporate innovation behavior. On the basis of patent-application data of Chinese enterprises, we used the difference-in-differences framework to study the differences in the performance of Chinese industrial enterprises in patent applications before and after China’s 2009 VAT reform. We demonstrated that China’s VAT reform had a positive impact on corporate innovation; this conclusion is robust. In subsequent research, we demonstrated that the VAT reform promoted corporate innovation by expanding corporate investment in fixed assets and reducing corporate debt ratios; however, due to the Chinese government’s subsidies to corporations and financing constraints, the pecking-order effect of corporate innovation was increased. In addition, the VAT reform had a greater impact on the innovation of export enterprises and non-state-owned enterprises. This research provided insights for emerging countries into formulating innovation-driven sustainable development tax reduction policies. Full article

(This article belongs to the Special Issue Fiscal Policy, the Theory and its Role in a Future Sustainable Economy Development)

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Open AccessArticle

The Effects of the Economic Adjustment Programmes for Greece: A Quasi-Experimental Approach

Julio Revuelta

Sustainability 2021, 13(9), 4970; https://doi.org/10.3390/su13094970 - 28 Apr 2021

Viewed by 903

Abstract

Three Economic Adjustment Programmes (EAPs) were implemented in Greece, between 2010 and 2015, without achieving the proposed economic objectives. This article analyses the impact of the EAPs in Greece using the synthetic control method (SCM) and has three main contributions. First, it identifies a long-term negative impact worth 35.3 per cent of the Greek GDP per capita caused by the application of the EAPs. Second, it finds that three-quarters of the estimated negative and unsustainable impact accumulated over the 2010–2012 period. Third, it identifies a regressive effect of the EAPs on income distribution, the Greek population with lower incomes experienced a greater negative effect caused by the adjustment programmes. These results underscore the need to review and correct the conditional financial assistance framework currently in force in the European Union. Full article

(This article belongs to the Special Issue Fiscal Policy, the Theory and its Role in a Future Sustainable Economy Development)

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Open AccessArticle

The Heterogeneous Public Debt–Growth Relationship: The Role of the Expenditure Multiplier

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Sustainability 2021, 13(9), 4602; https://doi.org/10.3390/su13094602 - 21 Apr 2021

Viewed by 471

Abstract

Currently countries are facing a new crisis caused by the COVID-19, which leads to the rise of government expenditures and additional borrowing. This situation highlights the importance of examine factors which determine the level of public debt that still sustains economic growth. A growing body of research supports the idea of a non-linear debt–growth relationship and estimates the threshold level above which debt becomes unsustainable and has a negative effect on output. The empirical evidence points out that there is no single sustainable debt threshold level that holds for all countries. This research complements scarce empirical evidence on the heterogeneous debt–growth relationship and provides some insights on the publicly available statistical indicators that might signal a relatively low/high expenditure multiplier and, at the same time, potentially unsustainable/sustainable growth stimulus through the use of borrowed funds. We test the hypothesis that the expenditure multiplier is shaping the impact of public debt on growth. Our empirical examination is based on panel data analysis in the groups of countries with expected relatively high and low expenditure multiplier. Research results show that a statistically significant negative marginal effect of debt on growth starts to manifest at a lower debt-to-GDP ratio when the expenditure multiplier is lower and vice-versa. The study shed some light on the sources of heterogeneity in a debt–growth relationship. We can conclude that countries with a high expenditure multiplier level can borrow more and sustain growth. In contrast, in countries with a lower expenditure multiplier, a relatively low debt level becomes unsustainable for growth. Full article

(This article belongs to the Special Issue Fiscal Policy, the Theory and its Role in a Future Sustainable Economy Development)

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Open AccessArticle

Impact of Governments’ Fiscal Behaviors on Public Finance Sustainability: A Comparative Study

Mihaela Onofrei

Tudorel Toader

Anca Florentina Vatamanu

and

Florin Oprea

Sustainability 2021, 13(7), 3739; https://doi.org/10.3390/su13073739 - 27 Mar 2021

Viewed by 498

Abstract

The aim of this research is to highlight the specificity of fiscal sustainability in some developing EU countries by analyzing the implications of fiscal rules on governments’ fiscal behaviors. We employ a panel data analysis to evaluate developing EU countries for the period 2000–2014 and we investigate the status of convergence of fiscal responsibility coordinates by computing the convergence score of fiscal responsibility. The research is based on interdisciplinary coordinates and helps to consolidate judgments from both legal and financial perspectives, making a contribution to the literature that investigates the relationship between the legal framework related to government decision-making and public finance sustainability. The choice of the study sample in relation to developing EU countries represents a contribution and a point of reference for the literature that investigates the sustainability of developing EU countries and highlights the importance of fiscal risk management and control mechanisms in enhancing the performance of the public sector and fiscal sustainability. The results suggest that it is important to reinforce the interaction between the legal framework and the institutional one by identifying good practices for designing and operating effective independent fiscal institutions, making them capable not only of advising the government on fiscal policy matters but also of promoting sound fiscal policy and sustainable public finance. Full article

(This article belongs to the Special Issue Fiscal Policy, the Theory and its Role in a Future Sustainable Economy Development)

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