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The Fiscal Consolidation Consequences On Economic Growth In Romania

Author

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  • Bogdan Andrei DUMITRESCU

    () (The Bucharest University of Economic Studies, Money and Banking Department)

Abstract

In the context of the economic and financial crisis the modification of the fiscal policy coordinates was seen either as a way to alleviate the impact of the crisis on the economic growth or as a necessity in order to reinsure fiscal sustainability. In both cases a correct estimation of the fiscal multipliers is crucial. This paper estimates the level of the fiscal multipliers for Romania in order to assess the impact on the economic growth generated by the fiscal consolidation process initiated in 2010. The results show that the levels of the fiscal multipliers are relatively low. However, there is an important difference between the values of the fiscal multipliers in the boom times compared to the periods when the economy operates below its potential and the empirical results showed a level of about 0.1 for the budgetary expenditure over the period 2000Q1- 2008Q2 and around 0.4-0.5 during 2008Q3-2014Q1, while the revenue multiplier was around 0.1 in both periods.

Suggested Citation

  • Bogdan Andrei DUMITRESCU, 2015. "The Fiscal Consolidation Consequences On Economic Growth In Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 136-151, September.
  • Handle: RePEc:rjr:romjef:v::y:2015:i:3:p:136-151
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    References listed on IDEAS

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    Cited by:

    1. Mirdala, Rajmund & Kameník, Martin, 2017. "Effects of Fiscal Policy Shocks in CE3 Countries (TVAR Approach)," MPRA Paper 79918, University Library of Munich, Germany.

    More about this item

    Keywords

    fiscal multipliers; structural VAR; fiscal consolidation; economic cycle;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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