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Kamelia Assenova
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overall costs a significant part of the income in different forms goes to consumption and the impact of public
spending on the aggregate demand and therefore on the GDP loses in the short term;
• short time horizon of economic agents in the countries in Central and Eastern Europe.
GDP
t
= (1.00) + 0.611 PCS
t
- 0.276 PCS
t-1
+ ε
(2)
The statistical analysis shows the coefficient of determination is more significant than such for the total cost by the
consolidated state budget. On this base, the economic analysis confirms the capital expenditure has a direct and an
additional multiple effects on the aggregate demand and the GDP. The correlation coefficients between GDP and
capital costs are significant. The impact in the current quarter is stronger, indicating these costs immediately pro-
duce a high demand for goods and services. As known from the theory, as a result - income increases and employ-
ment reduces not only in sectors, where the public capital spending made, but in others. It leads to an increase of
aggregate demand, not only through the public spending (G), but also indirectly through the consumer spending
(C). The correlation coefficient for the previous quarter is negative, but with less value compared with such in the
equation for the total spending. It confirms the thesis the capital expenditure, because long duration of each stage
of their turnover, retains the impact on the aggregate demand and therefore on the GDP for long period of time.
GDP
t
= (1.00) + 1.068 PSS
t
- 0.722 PSS
t-1
+ ε
(3)
By the statistical analysis is found the coefficient of determination for this type of cost - for salary and social insur-
ance - is the greatest compared with such for other types of expenditure. It confirms, the view of other studies
of the author, for Bulgaria more significant impact on the aggregate demand and therefore on the GDP has the
consumer spending. The correlation coefficients are absolutely significant. For the current quarter, this coefficient
shows a very strong impact of the cost of wages on the aggregate demand. It confirms the high elasticity of con-
sumption on an income and high marginal propensity to consume in the country. The earned income transforms
into consumer spending in a short period of time and without time lag increases the aggregate demand. And it
notes also a multiple effects in other sectors outside the publicly funded. The second correlation coefficient in this
equation is negative with a great value compared to such for the previous quarters by other types of spending. The
impact of income received from public funds, loses in a very short period of time and reaffirms very short time
horizon of economic agents in the countries in Central and Eastern Europe.
GDP
t
= (1.00) + 0.431 PMS
t
- 0.327 PMS
t-1
+ ε
(4)
1
GDP
t
= (1.00) + (0.493) PMS
t
+ ε
(4)
2
By the maintenance spending are tested two equations - with and without accounting the impact of maintenance
for the previous quarter. It due to the type of expenditure - they immediately transforms into goods and services
and increases the aggregate demand. The original thesis suggests that the cost for maintenance from the previous
quarter will not affect the economic activity in the current one. It is confirmed by the statistical analysis. When it
is tested two independent variables - for the current and for previous quarter - the coefficient of determination is
not significant and it should be viewed critically. When it is tested only the expenditure for the current quarter, it
remains approximately on the same level. The economic analysis notes in this case the expenditure has no signifi-
cant effect on the aggregate demand in the country. In both equations the correlation coefficients are significant,
but have higher value only in current quarter. As in the cases above, it confirms the economic agents without time
lag transform earned income in various forms in the purchase of goods and services and realize the impact on the
GDP in the same quarter.
4.2 Results for public spending with EF
GDP
t
= ( 1.00 ) + ( 0.424 )EF
t
– ( 0.338 ) EF
t-1
+ ε
(1)
The statistical analysis finds the correlation coefficients are significant. The economic analysis shows, the public
spending with EF paid has a stronger impact on the GDP in the current quarter compared with the previous
one. It means nevertheless of the nature of the EF projects, the multiple effects on the GDP immediately real-
ize. Moreover, by the global economic crisis is realized “crowding out” effect, successfully implemented to be