114-0444/03 – Fiscal Theory and Policy (FTP)

Gurantor departmentDepartment of EconomicsCredits4
Subject guarantorprof. Dr. Ing. Jan LibichSubject version guarantorprof. Dr. Ing. Jan Libich
Study levelundergraduate or graduateRequirementChoice-compulsory
Study languageCzech
Year of introduction2011/2012Year of cancellation
Intended for the facultiesEKFIntended for study typesBachelor
Instruction secured by
LoginNameTuitorTeacher giving lectures
DRA099 doc. Ing. Magdaléna Drastichová, Ph.D.
JAW127 doc. Ing. Jan Janků, Ph.D.
LIB009 prof. Dr. Ing. Jan Libich
WRO25 Ing. Tomáš Wroblowský, Ph.D.
Extent of instruction for forms of study
Form of studyWay of compl.Extent
Part-time Graded credit 12+0

Subject aims expressed by acquired skills and competences

Student should be able to: -assess the efficiency of governments fiscal measures -compare the theoretical approaches to fiscal imbalance -estimate the impact of fiscal variables' changes on other macro variables -design measures for improving the situation of public finance

Teaching methods



The course provides a comprehensive overview of the fiscal theory of the end of the 2nd World War II to present. It focuses on analyzing the effectiveness of fiscal policy in neokeynesovském IS-LM model for an open economy, further attention given the fiscal aspects of the new classical macroeconomics and New Keynesianism. For students choosing this course, presume the knowledge acquired in The subject A, Microeconomics A (resp. Economy A Economy B) and Economic policy A (or Economic Policy I). Benefits are also knowledge obtained in the global economy and history of economic theory their absence does not hinder the successful completion of the course.

Compulsory literature:

ROSEN, Harvey and Ted GAYER, Public Policy (Global 10th Edition), 2014. 700p. ISBN 978-00-7715-469-1. KNILL, Christoph a Jale TOSUN. Public Policy: A New Introduction. 2nd ed. Bloomsbury Publishing, 2020. 296 p. ISBN 978-11-3757-329-2. ALESINA, Alberto a Francesco GIAVAZZI. Fiscal policy after the financial crisis. Chicago: University of Chicago Press, 2013. 585 p. ISBN 978-02-2601-844-7.

Recommended literature:

AYUSO-CASALS, Joaqium. Policy instruments for sound fiscal policies: Fiscal rules and institutions. Basingstoke: Palgrave Macmillan, 2009. 356 p. ISBN 978-9-279-09310-4. HANSEN, Alvin Harvey a Seymour Edwin HARRIS. Monetary theory and fiscal policy. Chicago: Papamoa Press, 2018. 219 p. ISBN 978-1-78912-741-6. MANKIW, Gregory. Macroeconomics. 10th edition. New York: Macmillan International Higher Education, 2019. ISBN 978-1-319-24358-6.

Way of continuous check of knowledge in the course of semester




Other requirements

There are no additional requirements


Subject has no prerequisities.


Subject has no co-requisities.

Subject syllabus:

1. FISCAL POLICY IN CLOSED ECONOMY – THE IS-LM ANALYSIS - Crowding-out effect of government purchases - Fiscal policy multiplier - Interaction of monetary and fiscal policy in the IS-LM model 2. FISCAL POLICY IN OPEN ECONOMY – THE IS-LM-BP ANALYSIS - Efficiency of fiscal policy in alternative exchange rate regimes - Efficiency of fiscal policy in alternative levels of capital mobility 3. BUDGET DEFICIT AND ITS MEASUREMENT - budget deficit – its possible causes and consequences - Structural and cyclical deficit and their measurement - Alternative measures of fiscal imbalance 4. THEORY OF GOVERNMENT DEBT - Government debt, its causes and consequences - Domestic debt and its consequences. - Foreign debt and its consequences 5. RICARDIAN EQUIVALENCE. - Debt and taxes as equivalent methods of financing government expenditures - Permanent income – life cycle hypothesis application, interteporal choice - Ricardian equivalence and economic policy 6. FISCAL ASPECTS OF SUPPLY SIDE ECONOMICS - Theory of incentives (P. C. Roberts). - Theory of Laffer curve - Fiscal experiments in the 80’s (M. Thatcher, R. Reagan) and their results 7. THEORY AND EMPIRY OF FISCAL FEDERALISM - Neokeynesian conception of fiscal federalism (R. Musgrave). - W. Oates‘ approach of fiscal federalism - Fiscal policy in integrating Europe (EU, EMU). 8. INTERACTION OF MONETARY AND FISCAL POLICY. - Fiscal aspects of monetary policy - Seigniorage as a source of budget revenues - Intertemporal budget constraint and „weak version“ of fiscal theory of price level 9. LONG-RUN SUSTAINABILITY OF PUBLIC FINANCE - Demographic changes and fiscal sustainability - Role of mandatory expenditures in public finance

Conditions for subject completion

Part-time form (validity from: 2011/2012 Winter semester)
Task nameType of taskMax. number of points
(act. for subtasks)
Min. number of pointsMax. počet pokusů
Graded exercises evaluation Graded credit 100 (100) 51 3
        Obhajoba seminární práce Other task type 100  51 2
Mandatory attendence participation: Participation in lectures and tutorials is not mandatory

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Conditions for subject completion and attendance at the exercises within ISP: Participation in lectures and tutorials is not mandatory

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Occurrence in study plans

Academic yearProgrammeBranch/spec.Spec.ZaměřeníFormStudy language Tut. centreYearWSType of duty
2023/2024 (B0311A050004) Applied Economics (S02) Economic Development APE K Czech Ostrava 3 Compulsory study plan
2022/2023 (B0311A050004) Applied Economics (S02) Economic Development APE K Czech Ostrava 3 Compulsory study plan
2021/2022 (B0311A050004) Applied Economics (S02) Economic Development APE K Czech Ostrava 3 Compulsory study plan
2020/2021 (B0311A050004) Applied Economics (S02) Economic Development APE K Czech Ostrava 3 Compulsory study plan
2019/2020 (B0311A050004) Applied Economics (S02) Economic Development APE K Czech Ostrava 3 Compulsory study plan
2011/2012 (N6202) Economic Policy and Administration (6202T055) Public Economics and Administration (02) Public Economics and Administration K Czech Ostrava Choice-compulsory study plan

Occurrence in special blocks

Block nameAcademic yearForm of studyStudy language YearWSType of blockBlock owner

Assessment of instruction

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