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An Optimality Assessment Of The Fiscal Consolidation Process Initiated By Romania In 2010

Author

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  • DUMITRESCU, Bogdan Andrei

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

Abstract

The manifestation of the economic and financial crisis consequences in Romania at the end of 2008 coincided with the accumulation of severe imbalances in terms of public finances position and current account balance. The inevitable decision of the Romanian authorities to implement a program of fiscal consolidation in 2010 raised the question of its optimality in terms of size and composition, namely the mix between the modification of different categories of revenues and expenditures. The present study calculated the short and medium term need for fiscal adjustment existent in 2009 and also compared the structure of the chosen fiscal consolidation package with the one indicated by the best practices from the literature. The paper concludes that, although the fiscal consolidation program has been successful in correcting the fiscal imbalances, its quality in terms of composition was an average one.

Suggested Citation

  • DUMITRESCU, Bogdan Andrei, 2015. "An Optimality Assessment Of The Fiscal Consolidation Process Initiated By Romania In 2010," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 19(1), pages 8-20.
  • Handle: RePEc:vls:finstu:v:19:y:2015:i:1:p:8-20
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    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2010. "Growth in a Time of Debt," American Economic Review, American Economic Association, vol. 100(2), pages 573-578, May.
    2. Stephen Cecchetti & Madhusudan Mohanty & Fabrizio Zampolli, 2011. "The real effects of debt," BIS Working Papers 352, Bank for International Settlements.
    3. Boris Cournède & Antoine Goujard & Álvaro Pina, 2013. "How to Achieve Growth- and Equity-friendly Fiscal Consolidation?: A Proposed Methodology for Instrument Choice with an Illustrative Application to OECD Countries," OECD Economics Department Working Papers 1088, OECD Publishing.
    4. Mr. Alejandro D Guerson, 2013. "The Composition of Fiscal Consolidation Matters: Policy Simulations for Hungary," IMF Working Papers 2013/207, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    fiscal consolidation; economic growth; equity; crisis management;
    All these keywords.

    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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