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Optimality of Fiscal Policy in Romania in Terms of Laffer Curve



    (“Spiru Haret” University, Bucharest)

  • Petre BREZEANU

    (Bucharest Academy of Economic Studies)


Optimality of fiscal policy is an issue widely debated in the literature from multiple perspectives. One way to address this problem is with the Laffer curve, causing the correlation between tax burden and tax revenue. This paper addresses the correlation with Laffer curve for income tax made during the period 2000-2010, highlighting the fact that the Romanian economy lies in the inadmissible slope of the curve, both in analyzing the entire period, and in the part of each year. Moreover, this result reveals the existence of unnecessary redistribution of income in the Romanian economy during the period under review.

Suggested Citation

  • Adina TRANDAFIR & Petre BREZEANU, 2011. "Optimality of Fiscal Policy in Romania in Terms of Laffer Curve," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(8(561)), pages 53-60, August.
  • Handle: RePEc:agr:journl:v:8(561):y:2011:i:8(561):p:53-60

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    References listed on IDEAS

    1. Elena Arnal & Alexander Hijzen, 2008. "The Impact of Foreign Direct Investment on Wages and Working Conditions," OECD Social, Employment and Migration Working Papers 68, OECD Publishing.
    2. Larisa APARASCHIVEI & Maria Denisa VASILESCU & Nicolae CĂTĂNICIU, 2011. "The Impact of Investments and Gross Value Added upon Earnings," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(555)), pages 207-218, February.
    3. David M. Drukker, 2003. "Testing for serial correlation in linear panel-data models," Stata Journal, StataCorp LP, vol. 3(2), pages 168-177, June.
    4. David G. Blanchflower & Andrew J. Oswald, 1995. "An Introduction to the Wage Curve," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 153-167, Summer.
    5. Nigel Driffield & Sourafel Girma, 2003. "Regional Foreign Direct Investment and Wage Spillovers: Plant Level Evidence from the UK Electronics Industry," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(4), pages 453-474, September.
    6. Christopher F Baum, 2001. "Residual diagnostics for cross-section time series regression models," Stata Journal, StataCorp LP, vol. 1(1), pages 101-104, November.
    7. Zhao, Laixun, 1998. "The Impact of Foreign Direct Investment on Wages and Employment," Oxford Economic Papers, Oxford University Press, vol. 50(2), pages 284-301, April.
    8. Daniel Hoechle, 2007. "Robust standard errors for panel regressions with cross-sectional dependence," Stata Journal, StataCorp LP, vol. 7(3), pages 281-312, September.
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    Cited by:

    1. Liliana Bunescu & Carmen Comaniciu, 2013. "Graphical Analysis Of Laffer'S Theory For European Union Member States," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 16-23, April.

    More about this item


    fiscal policy; Laffer curve; tax burden.;


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