Perspectives on the impact of financial public policy in advancing circular economy

Objective:The transition to the circular economy is an important strategic objective of the European Union, supporting eventually most of the sustainable development objectives. The objective of the paper is to analyse the importance and potential role of the public financial policy, to foster or promote the environmental, economic and social benefits of a circular economy (CE), in view of a fast and efficient transition in the EU countries;Method: The methodological approach is based on literature review, database creation, statistical and economic analysis of indicators.There are first stated some conceptual grounds of the circular economy pillars and features, followed by principles and trends of circular economy public financial policies and instruments in the European Union. In order to estimate a panel regression model that describes the influence of public finance on the circular economy, the last sections deal with the evolution 2009-2020 of main indicators, as well as with the econometric model.Results:The regression model indicated that increases in taxation or government output, above a certain limit, would lead to a reduction in the degree of circularity.It is more advisable that the Taxes on Production and Imports (TPI) and the General Government Output (GGO) are kept at relatively moderate values for the circular economy to develop.Originality:In this original approach, the influence of financial policies on the circular economy was analysed through the lens of two indicators:General Government Output (GGO) and Taxes on Production and Imports (TPI), both expressed as a percentage of GDP (%).These indicators were used in the regression model as determinant proxy variables for the determined circularity variable Circular Material Use Rate(CMUR %, as CE synthetic indicator).