Extensive analyses of the public finances of Liechtenstein are carried out in this research project. In relation to current political debates about spending cuts, different tools or mechanisms are being examined and critically discussed: A reform of the existing benchmark goals of the state budget (Finanzeckwerte), the development of a “deficit brake”, more power for the introduced financial control (Finanzkontrolle), or the introduction of a national audit court.
In this context, the public financial balances are analysed. Besides the separation of the structural component from business cyclical and irregular influences on the various elements of expenditure and revenue, cyclical elasticities are calculated. Also, the persistence of shocks will be captured in a time serial model.
Moreover, the structural deficit and the sustainability of the public budgets are of further interest. Thereby, exogenous determinants (e.g. current international economic crisis) and endogenous factors (weak economic growth in Liechtenstein, reform of financial sector, recent tax reform, spending cuts) are explicitly taken into account. The calculative and econometric estimations are applied to the balances of the state, communities and social insurances.
A data base (as long into the past as possible, without structural breaks and also with deflated values) is being set up in order to deal with the mentioned objects of investigation and compute relevant public expenditure quotas. Also, potential reasons for the observed patterns and developments in the compiled public finance data will be identified, also considering already existing relevant (Liechtenstein-related) literature.