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Fiscal Policy Dynamics, Employment And Consumption

Author

Listed:
  • Cornelia VĂCEANU

    (Bucharest University of Economic Studies)

  • Petronela Evelina BĂLU

    (Bucharest University of Economic Studies)

Abstract

The aim of this paper is to analyse both in theory and in practice fiscal policy effects on the employment rate. For example, even if taxation is one of the main instruments of fiscal policy of the government in reducing unemployment, high taxes reduce disposable incomes of consumers, which automatically leads to lower consumption and when consumers buy less, increases the odds that the unemployment increase. To highlight this we used the comparison of a dynamic influence of fiscal policy on macroeconomic variables with the empirical results from an identified multidimensional model. Data shows a positive conditional correlation between government expenditures increase and labour force supply.

Suggested Citation

  • Cornelia VĂCEANU & Petronela Evelina BĂLU, 2015. "Fiscal Policy Dynamics, Employment And Consumption," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 8, pages 183-189, June.
    • Handle: RePEc:cmj:seapas:y:2015:i:8:p:183-189
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    More about this item

    Keywords

    Fiscal policy; Employment; Consumption; Budget deficit;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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