Strategia makroekonomiczna Polski w warunkach światowego kryzysu

Different countries have applied different policies to deal with the latest economic crisis that has struck the world. While Poland and other new member states of the European Union have tightened their fiscal policies and resorted to various supply-side instruments, the United States, Japan and many old EU member countries have employed a fiscal expansion policy. This policy is based on a GDP growth multiplier effect and an increased use of public debt to finance government expenditure. The author estimates a potential fiscal impulse multiplier for the Polish economy in 2008 and follows up with a discussion of the key arguments of critics and advocates of the fiscal expansion strategy. In new EU member states, the ratio of the current-account deficit to GDP and the ratio of foreign debt to GDP are the main factors that determine whether or not there is room for fiscal expansion in the economy, the author says. In the wake of the global financial crisis, these ratios increased dramatically in these countries, chiefly due to previously underestimated system risks. Those risks resulted from the fact that new EU member countries maintained their interest rates at a high level for many years to keep inflation in check. The difference between the domestic and foreign interest rates was largely responsible for a progressive appreciation of the exchange rate, accompanied by a decreased competitiveness of exporters, increased foreign debt of businesses and households, and growing reliance on foreign investment as a way of covering the trade deficit. All these risks materialized when the international financial crisis began. The paper aims to determine if there is room for a fiscal expansion policy in Poland and whether such a policy could lead to a major increase in Treasury security yields and higher public debt service costs. This question requires detailed calculations, Osiatyński says. Even though the 2009 budget deficit was 121 percent financed from domestic sources in the first five months of the year, the policy produced no major increase in Treasury security yields, which may mean that there is room for such a policy in Poland, Osiatyński concludes. Otherwise the country could face a prolonged period of economic stagnation, he adds.