Fiscal Policy and Capital Formation in Transition Economies

47 Pages Posted: 28 Sep 1999


The paper discusses the relations between fiscal policy, savings, capital formation and growth in transition economies. In the 1990s they have suffered significant recession and persistent imbalances. Fiscal policies were aiming mainly at the structural adjustment, liberalization and stabilization. The issue of capital formation has been somewhat overlooked. Lately, in the countries advanced in transition, capital formation is gaining momentum. It is based on growing domestic savings, yet the nondebt flow of foreign capital is important, too. Policies facilitating sustainable growth ought to target a shift from direct to indirect taxation, thereby gradually reducing the corporate tax burden and narrowing the personal tax brackets and widening the tax base.

JEL Classification: H00, O00, E60, F41, P20

Suggested Citation

Kolodko, Grzegorz W., Fiscal Policy and Capital Formation in Transition Economies. Available at SSRN: or

Grzegorz W. Kolodko (Contact Author)

Kozminski University ( email )

Jagiellonska 59
Warszawa, --- Select One --- 03301

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