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Public Spending, Financed With European Funds and Its Impact on the Aggregate Supply in Central and Eastern Europe
483
n
substituted reduced private investment with public ones, which is very important in the countries in Central and
Eastern Europe with small disposal local resources. The second coefficient in the regression equation is negative.
The economic correlation between the independent variable - EF, and the dependent variable - GDP is a positive.
Measured like this, it shows following:
• strong seasonal fluctuations of using of EF (confirmed by the data - in the first quarter the amount paid is less
compared with in others for each year of the period. Nevertheless , as will be seen from coming analysis - it has
a strong impact on the value of annual GDP) ;
• unequal using of European funds year by year – from small amount in first years of period to strong increase
in last years.
The testing of public spending, financed with EF and its impact on annual GDP quarterly begins with the data for
the first quarter.
GDP
year
= (1.00 ) + (0.896) EF
t-3
+ ε
(2)
Statistically the correlation coefficient is significant. The coefficient of determination shows a strong dependence
of the GDP from the using of EF (R - square = 0.803). By the economic analysis EF paid during the first quarter
has a strong impact on annual GDP and most probably due to the time lag between making of the spending and
their multiple effects on the value of aggregate supply. The amount of EF paid during the first quarter in each of
the years, studied in this paper, is least, reducing the maximum possible impact on the aggregate supply.
GDP
year
= (1.00 ) + (0.370 ) EF
t-2
+ ε
(3)
The statistical coefficient of correlation for the impact of public spending, financed with European funds on the
GDP for second quarter should be considered critical. The coefficient of determination displays the depending
on the value of GDP from the using of EF, but less than such in the first quarter (R - square == 0. 137). By the
economic analysis it is found the public spending, financed with EF in the second quarter has a relatively low
impact on annual GDP. It probably due to the seasonality in some priority sectors of the Bulgarian economy and
the result appears on GDP in the third quarter.
GDP
year
= (1.00 ) + (0.995 )EF
t-1
+ ε
(4)
Statistically the correlation coefficient is extremely significant. The coefficient of determination shows a very
strong dependence of the GDP from the using of EF. (R - square = 0.991). Due to the project nature of EU funds
paid and it needs from certain time lag between use and their impact on the value of aggregate supply. The public
expenditure with these funds during the quarter has strongest influence on annual GDP. From the data it was
noted, during the third quarter of years of the period are paid largest amounts of funds. The results of analysis on
a quarterly basis and their impact on annual amount of GDP corresponds to the data obtained by the analysis in
paragraph 1 of this section, examining the impact of public expenditure paid by EF on GDP for the whole period
- 2008 - 2013.
GDP
year
= (1.00 ) + (0.895 )EF
t
+ ε
(5)
Statistically the correlation coefficient is extremely significant. The coefficient of determination shows a very strong
dependence of the GDP of using of EF. (R - square = 0.801). The public spending, financed with EF has a strong
impact on annual GDP. This analysis fully corresponds with such in paragraph 1 of this section, proving public
spending during the current quarter strongly influences on the amount of annual GDP in the Bulgarian economy.
It explains the short time horizon of economic agents as part of the realized income in the same period allotters for
consumption, thereby increasing the aggregate demand and hence the aggregate supply in the economy.
In conclusion, statistically for all quarters of year (except the second) the coefficients of determination give the
strong dependence of GDP from public spending, financed with European funds. The high correlation coefficients
between paid European funds and GDP mean the stimulating of the economic activities in Central and Eastern
Europe and the increasing of the aggregate demand depends on the absorption of European funds.