The latest issue of the Public Finance Quarterly focuses on sustainability and trust. The focus topic is presented through four different studies, from which the Reader may learn how the trust and the sustainability affect the operation of state, what future lies ahead forof green bonds supporting sustainable development, how the European Union seeks to ensure the sustainability of financial services and what horizontal development of economics is. In addition, four other studies address interesting issues such as the impact of regulation on the financial performance of microfinancing organizations, the tax burden on labor income in the Visegrad region, the price effects of the 2016-2017 Hungarian VAT changes or the theoretical, methodological challenges of cost-benefit analysis.
Focus - Sustainability and Trust
Norbert Kis’ study, "The role and impact of trust on the operations and sustainability of the state" examines elements of correlation between security, trust and economy based on the experiences of governance in Hungary. The author states that it can be verified that only those governments will be successful in the economy that are able to strengthen citizens' sense of security. If a government’s response to a security test is inadequate, it will lose public confidence regardless of any other positive results. Therefore the success factor for future governance is the security of people. The findings of the study are supported by the author's statistical analysis.
The study of Zsolt Mihálovits and Attila Tapaszti, entitled "Green Bond, a Financial Instruments Supporting Sustainable Development", investigates the limitations and possible breakthroughs of further market expansion, the uniqueness of environmental risks and the difficulties of internalisation, as well as the potential role of central banks in the development of the green bond market and the necessity of global action. Based on their results, it can be stated that the global spread of green bonds has not been realised yet, but both market players and regulators have now recognized the role of green bonds in promoting sustainable economic growth.
Andrea Elekes’ essay titled "Analyzing Sustainable Growth - Sustainable Financial Services in the European Union", is based on theories of economic growth by clarifying the concept of sustainable growth in the European Union's May 2018 presentation of a draft regulation for the sustainability of financial services, and provides guidance on activities, which are considered sustainable under the draft. Based on the the new regulation, it is possible to identify the areas that are most likely to be reallocated resources in the future: improving resource efficiency; more compact, more interconnected (smarter) urban systems; land use optimization; low carbon infrastructure and energy system; as well as innovation in the development of these areas.
Katalin Botos' study "Horizontal Science Development" emphasizes that in economics the science development is not vertical, but horizontal, that is to say, not only one model exists but different models. According to the author, the reconsideration of the economics is inevitable, and in the teaching of economics, more practical curricula should be developed. In order to give an explanation of the economic crisis, it is important to include the functioning of monetary institutions in economic models. It is also important to reconsider monetary rules. The author concludes that we should go back to old-fashioned morality and make economics more ethical.
Waqas Amin and his co-authors, in their study "The Impact of Regulation on Financial Performance of Microcredit Organizations and the Reach of Clients", aim to determine the impact of the regulation of microfinancing organizations on the financial performance of their organizations and their reach. The results are based on the data of 413 micro-credit organizations in 21 Latin American countries for the 2005-2017 period.
Bálint Ván and Oláh Dániel in the study titled "Does the VAT Reduction feature on the menu?" analyze the price effects of the 2016-2017 Hungarian VAT changes using a synthetic control method. In the case of pork and chicken meat the authors found that the price effect was overall, in the case of fresh milk and eggs only partial, while in the restaurant prices the 2016-2017 Hungarian VAT cuts did not appear at all. The price effects of foodstuffs are the same as in the Romanian food abatement reduction in 2015.
András Giday and László Mádi in the analyse entitled "Tax burden on labor income in the Visegrad region", examine the index of tax burden on labor income. The figures clearly show that the tax burden on labor in the Visegrad region is overall lower than in the EU's older continental countries. Differences between countries have declined over the last decade. The reasons for the differences in withdrawals can be explained by the following factors: the burden of public debt, the weight of small businesses, the role of tourism, the weight of consumer taxes, and tax traditions.
Tünde Vörös' study "Methodological Challenges in Cost-Benefit Analysis" aims to present the theoretical, methodological challenges of cost-benefit analysis in the light of practical application. Following a brief overview of the development of cost-benefit analysis, the author seeks to examine the methodological problems of analyzes used in social investment decision-making. Among other things, the question of the multiple accounting of benefits, the uncertainty of the applied estimates, the choice of the value of the social discount rate, the taking into account of the social cost of public finances and the role of cost-benefit analysis in practical decision-making are analyzed.
Published issues in 2018
Focus on Public Finances - Highlights of the Current Issue
Stability and Growth – Annual Report of Public Finace Quarterly
Editorial of Public Finance Quarterly
State Audit Office of Hungary