INSTITUTIONAL MECHANISM OF PUBLIC CHOICE IMPLEMENTATION

Abstract

The article considers the institutional aspects of the public finance functioning. The aim of the article is to study the institutional mechanism of public finance at the stage of implementation of public choice through the prism of transactional and transformational costs. Transaction costs have been found to be a key feature in assessing the ef-fectiveness of an institutional mechanism. It is pointed out that at the stage of implementation of public choice an im-portant role is also played by the transformation costs associated with the direct transformation of the factors of social production into goods and services provided by budgetary institutions. It is noted that the institutional mechanisms of tax collection, government borrowing, settlement and cash servicing of public finance do not lead to the production of certain goods, acting only as service subsystems necessary for public production by budgetary institutions of education, health, culture, law enforcement. The concept of “public transaction costs” has been introduced into scientific circula-tion, as they are the antithesis of public goods (having similar properties) - their burden is distributed simultaneously to the whole society when it is impossible to avoid harm from the particular individual, which is eroding in the general system of public finance. The implemented study suggests an excessive level of public transaction costs in Ukraine. Evidence of this is the high level of interest in the market of domestic government bonds, the prevalence of informal transactions and corruption in the field of state property, fiscal administration and functioning of budgetary institu-tions. The need to implement measures aimed at institutional optimization of public transaction costs was emphasized. It is noted that this will be facilitated by transparency and publicity in access to detailed information on all transactions of budgetary institutions, authorities and state enterprises, disclosure of income declarations of public figures, intro-duction of public financial control, formation of public-private partnership in supply of public goods and services.