| Abstract [eng] |
After the 2008 financial crisis the relevance of fiscal policy, especially in Eurozone countries increased and still increasing nowadays since European Central Bank (ECB) can’t adjust its policies in favor for each individual country. Since fiscal policy is implemented by political parties, the main goal in this research was to analyze political ideology effect on financial stability and which political ideology, left or right ensures more stability. For this purpose, Visegrad countries using fixed effect regression model were analyzed. Results showed that five variables have statistically significant effect on financial stability; higher government spending, corporate taxes, unemployment, and inflation were found to have negative effect on financial stability. Also, higher governing effectiveness were found to have positive effect on economy. Even though it was expected to find left-wing government negative effect on financial stability, the regression showed statistically insignificant results. Also, in order to find whether above mentioned five variables are related with political ideology, another regression model was implemented. Results showed government effectiveness to be statistically significant with negative coefficient. This indicates that left-leaning governments are more efficient and thus through this channel ensures better financial environment. |
