ANALYSIS OF THE SUSTAINABILITY AND CHARACHTER OF FISCAL POLICY IN THE REPUBLIC OF CROATIA

Fiskalna politika izrazito je važan instrument u stabilizaciji poslovnih ciklusa, pogotovo u malim otvorenim gospodarstvima poput Hrvatske. Uloga i važnost fiskalne politike značajno je porasla ulaskom Hrvatske u Europsku uniju i nastojanjima za ulazak u europodručje čime se monetarni suverenitet prenosi na Europsku središnju banku. Upravo zbog toga ovaj rad fokusirao se na karakter i adekvatnost fiskalne politike u Hrvatskoj, gdje je pokazano jesu li se nositelji ekonomskih politika pridržavali načela fiskalne održivosti. Analiza je izvršena procjenom funkcije fiskalne reakcije gdje su korišteni kvartalni podaci o udjelu javnog duga u BDP-u, udjelu primarnog proračunskog salda opće države u BDP-u te podaci o jazu BDP-a. Naglasak je stavljen na razdoblje Procedure prekomjernog proračunskog deficita (eng. Excessive deficit procedure, EDP). Osim dijela vezanog uz fiskalnu održivost, teorijski je obrađeno područje vezano uz stabilizacijsko djelovanje te provedena istraživanja drugih autora. Kao determinante analizirane su tri osnovne komponente ukupnog proračunskog salda: diskrecijske komponente, ugrađeni stabilizatori i opterećenje javnog duga. Rezultati istraživanja pokazuju da je tijekom promatranog razdoblja fiskalna politika vođena načelom održivosti te je prisutan kontracikličan karakter u osnovnim modelima, dok se uvođenjem kontrolnih varijabli gubi svojstvo održivosti, ali je i dalje prisutan kontracikličan karakter. Razdoblje članstva u Europskoj uniji povezano je s višim razinama primarnog proračunskog salda što upućuje na fiskalnu održivost u tom periodu jer su nositelji ekonomskih politika morali odgovornije upravljati javnim financijama.Fiscal policy is an especially important instrument in stabilizing business cycles, particularly on small open economies like Croatia. The role and importance of fiscal policy increased significantly with Croatia's entry into the European Union and efforts to join the euro area, which transfers monetary sovereignty to the European Central Bank. This is the main reason why this paper focused on the character and adequacy of fiscal policy in Croatia, where it was shown that economic policy holders adhered to the principle of fiscal sustainability. The analysis was performed by estimating the fiscal reaction function, where quarterly data were used on the share of public debt as a percentage of GDP, the share of the primary budget balance of the general government as a percentage of GDP, and data on the GDP gap. Special emphasis was placed on the period of the Excessive Budget Deficit Procedure (EDP). In addition to the part related to fiscal sustainability, the area related to stabilization action was theoretically treated and research by other authors was carried out. Three basic components of the total budget balance were analyzed as determinants: discretionary components, built-in stabilizers and public debt burden. The results of the research show that during the observed period, the fiscal policy was guided by the principle of sustainability, and a countercyclical character is present in the basic models, while the sustainability property is lost with the introduction of control variables, but the countercyclical character is still present. The period of membership in the European Union is associated with higher levels of the primary budget balance, which points to fiscal sustainability in that period, because economic policy holders had to manage public finances more responsibly