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Investment And The Golden Rule In The European Union

Author

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  • MARINESCU, Ada Cristina

    (The School of Advanced Studies of the Romanian Academy Department of Economics, Sociology and Law)

Abstract

We will study in this paper the relation between public investment, public debt and fiscal rules in the European Union countries. The strict fiscal rules imposed by EU have negatively affected the investments. The decline in public investment in European Union is related to the fiscal rules (mainly the deficit rule) included in the Stability and Growth Pact (SGP). There have been made several attempts to amend the SGP in such a way to grant a more flexible treatment to capital expenditure when fixing budgetary targets and ceilings. According to the golden rule of budget deficit, investments can be financed through loans, while current expenditure should be financed from taxes. The golden rule promotes thus intergenerational fairness and contributes to economic growth.

Suggested Citation

  • MARINESCU, Ada Cristina, 2018. "Investment And The Golden Rule In The European Union," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 22(1), pages 53-63.
  • Handle: RePEc:vls:finstu:v:22:y:2018:i:1:p:53-63
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    References listed on IDEAS

    as
    1. Easterly, William & Rebelo, Sergio, 1993. "Fiscal policy and economic growth: An empirical investigation," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 417-458, December.
    2. António Afonso & Juan Alegre, 2011. "Economic growth and budgetary components: a panel assessment for the EU," Empirical Economics, Springer, vol. 41(3), pages 703-723, December.
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    More about this item

    Keywords

    fiscal rules; public debt; public deficit; Stability and Growth Pact;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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