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The Fiscal Framework In Romania – The Efficiency Of Fiscal Rules

Author

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  • DUMITRESCU, Bogdan Andrei

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

Abstract

The response of the fiscal policy makers to the fiscal crisis in Romania from 2009-2010 was the initiation of a comprehensive program of fiscal consolidation in mid-2010 alongside with a fundamental modification of the institutional framework within operates the fiscal policy, namely switching to a precisely defined rules-based fiscal framework compared to the previously existing broad discretion. The effectiveness of a fiscal rule is given by the constraint it imposes on the behavior policy makers. This research examines the effectiveness of the fiscal rules introduced by Romania in 2010 through the Fiscal Responsibility Law by assessing the exante and ex-post compliance with the rules and concludes that this was rather reduced, the fiscal rules failing to exert strong constraints on the behavior of policy makers. In this context, it is necessary a reform of the existing fiscal rules, especially in the context of implementing in the national legislation since 2014 of the rules stipulated in the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union.

Suggested Citation

  • DUMITRESCU, Bogdan Andrei, 2015. "The Fiscal Framework In Romania – The Efficiency Of Fiscal Rules," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 19(3), pages 91-106.
  • Handle: RePEc:vls:finstu:v:19:y:2015:i:3:p:91-106
    as

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    References listed on IDEAS

    as
    1. Frankel, Jeffrey A. & Vegh, Carlos A. & Vuletin, Guillermo, 2013. "On graduation from fiscal procyclicality," Journal of Development Economics, Elsevier, vol. 100(1), pages 32-47.
    2. Alberto Alesina & Filipe R. Campante & Guido Tabellini, 2008. "Why is Fiscal Policy Often Procyclical?," Journal of the European Economic Association, MIT Press, vol. 6(5), pages 1006-1036, September.
    3. Elva Bova & Nathalie Carcenac & Martine Guerguil, 2014. "Fiscal Rules and the Procyclicality of Fiscal Policy in the Developing World," IMF Working Papers 14/122, International Monetary Fund.
    4. Carluccio Bianchi & Mario Menegatti, 2012. "Rules Versus Discretion In Fiscal Policy," Manchester School, University of Manchester, vol. 80(5), pages 603-629, September.
    5. Fatas, Antonio & Mihov, Ilian, 2006. "The macroeconomic effects of fiscal rules in the US states," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 101-117, January.
    6. Talvi, Ernesto & Vegh, Carlos A., 2005. "Tax base variability and procyclical fiscal policy in developing countries," Journal of Development Economics, Elsevier, vol. 78(1), pages 156-190, October.
    7. Barbone, Luca & Islam, Roumeen & Sanchez, Luis Alvaro, 2010. "The great crisis and fiscal institutions in eastern and central Europe and central Asia," Policy Research Working Paper Series 5453, The World Bank.
    8. repec:hrv:faseco:34729976 is not listed on IDEAS
    9. Alexandra ADAM & Silvia Elena IACOB, 2014. "Fiscal consolidation through fiscal rules?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(591)), pages 109-114, February.
    10. repec:agr:journl:v:2(591):y:2014:i:2(591):p:109-114 is not listed on IDEAS
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    More about this item

    Keywords

    fiscal policy; fiscal governance; fiscal rules;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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