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Re-modeling the Romanian Fiscal Policy under the Terms of the Economic Crisis

Author

Listed:
  • Aura Gabriela SOCOL

    (Bucharest Academy of Economic Studies)

  • Dorin MĂNTESCU

    (Bucharest Academy of Economic Studies)

Abstract

This paper brings arguments for the necessity to re-think the modality to analize and interpret the Romanian fiscal policy, under the terms of the future adheration to the Euro Zone. Under these terms, this study estimates the structural budget deficit, considering this indicator as one of the most relevant for assessing the performance of the fiscal management, and also the extent to which the Romanian fiscal policy is prepared to act as a sole instrument which can stabilize the national economy after entering the Euro Zone. The work is structured as it follows: (i) estimate for the potential GDP and for the output gap by means of the production function method and by the use of the Hodrick- Prescott filter; (ii) estimate for the cyclic budget component, based on the deficit sensitivity (using the elasticities of the government revenues and purchases related to the GDP) and on the value of the output gap and, subsequently, of the structural budget component. Finally, the work mentions a series of conclusions and recommendations regarding the methodological re-construction of the assessment for the fiscal policy’s efficiency.

Suggested Citation

  • Aura Gabriela SOCOL & Dorin MĂNTESCU, 2011. "Re-modeling the Romanian Fiscal Policy under the Terms of the Economic Crisis," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(554)), pages 111-120, January.
    • Handle: RePEc:agr:journl:v:xviii(2011):y:2011:i:1(554):p:111-120
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    References listed on IDEAS

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    3. Cécile Denis & Daniel Grenouilleau & Kieran Mc Morrow & Werner Röger, 2006. "Calculating potential growth rates and output gaps - A revised production function approach," European Economy - Economic Papers 2008 - 2015 247, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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    6. Paul van den Noord, 2000. "The Size and Role of Automatic Fiscal Stabilizers in the 1990s and Beyond," OECD Economics Department Working Papers 230, OECD Publishing.
    7. Henning Bohn, 2005. "The Sustainability of Fiscal Policy in the United States," CESifo Working Paper Series 1446, CESifo.
    8. Claude Giorno & Pete Richardson & Deborah Roseveare & Paul van den Noord, 1995. "Estimating Potential Output, Output Gaps and Structural Budget Balances," OECD Economics Department Working Papers 152, OECD Publishing.
    9. Bouthevillain, C. & Van Den Dool, G. & Langenus, G. & Mohr, M. & Momigliano, S. & Tujula, M. & De Cos, P.H. & Cour-Thimann, Philippine, 2001. "Cyclically Adjusted Budget Balances: an Alternative Approach," Papers 77, Quebec a Montreal - Recherche en gestion.
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    Cited by:

    1. Nchor, Dennis, 2020. "Labour mobility as an adjustment mechanism to asymmetric shocks in Europe : Evidence from the Czech Republic, Hungary, Poland and Slovakia," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 54, pages 1-16.
    2. Maria Mirabela Florea Ianc & Loredana Ciurlău, 2016. "Advantages and Disadvantages Romania's Transition to the Euro," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 99-103, February.
    3. repec:iab:iabjlr:v:54:i::p:art.16 is not listed on IDEAS
    4. Dennis Nchor, 2020. "Labour mobility as an adjustment mechanism to asymmetric shocks in Europe: evidence from the Czech Republic, Hungary, Poland and Slovakia," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-19, December.

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