THEORETICAL ESSENCE AND FEATURES OF FISCAL SPACE FORMATION

Abstract

The importance of public finance sphere is determined due to the importance of financial security and the implementation of state functions and the achievement of the objectives of social and economic development. Decrease in revenues due to the economic downturn in the background of increasing spending on anti-crisis measures have led to a significant budget deficit and the rapid growth of public debt, and therefore the problems of development and further expand fiscal space gained special relevance, as it involves issues related to activation of resources needed to increase funding for science, technology and innovation, improving the quality of human capital, which are factors of long-term economic growth.

The foregoing has defined the purpose of this article, which consists of the deep studying and clarifying of the definition of economic substance "fiscal space" and systematization of forming tools of fiscal space.

The critical analysis of different definitions of the essence of the concept of "fiscal space" is done and on this basis, alternative approaches to his interpretations are defined- targeted, quantitative, resource, cost and resultative approaches. The proposed interpretation of the economic content of the definition of fiscal space combines the advantages of the above approaches, such as consideration of target orientation of fiscal space’s formation, identification of sources of fiscal space that allows it to perform its quantitative evaluation, underlining the results of the relationship of the fiscal space formation with active fiscal proceedings policy, including the rationalization of public expenditure. It is determined the tax, the budget and the other tools that are used by the state to create fiscal space. It is proved that in practice there are three basic combinations of tools of fiscal space forming - fiscal expansion (fiscal stimulus), fiscal consolidation (fiscal stabilization) and fiscal restriction (fiscal containment). It is proved the necessity of the use of fiscal instruments at different phases of the economic cycle in order to neutralize the negative changes and to provide economic dynamics the accelerating momentum. Thus, the choice of forming tools of fiscal space should depend on the current state of public finances. It is proved that the rational use of tools of fiscal space formation will not only lead to changes in the fiscal sphere, but it will also affect the financial and real sectors of the economy, employment, social programs, and so on.