Fiscal Policy during the current Crisis
Fiscal policy is an important government tool for managing the economy, having the ability to affect the total amount of output produced - GDP. Changes in the level and composition of government spending, taxation or other instruments of fiscal policy have impact on aggregate demand, the pattern of resource allocation, and the distribution of income. The article shows the mechanisms through which fiscal policy stabilizes the business cycle, and the specific requirements for fiscal policy during recession; the practical problems that may occur in implementing an effective fiscal policy are emphasized. Regarding the circumstances of the current financial and economic crises, the revival of the fiscal policy as a macroeconomic policy faces high expectations as to what it can accomplish. The paper highlights the composition of fiscal stimulus package, and reviews the specific fiscal stimulus plans adopted so far by different countries and their objectives. The final section contains an overview of the Romanian government response to the current crises, regarding fiscal policy. The conclusion is that Romania has conducted an inconsistent and ineffective fiscal policy, which has contributed to macro-economic and fiscal imbalances and to an increased fiscal pressure on business. Therefore, a medium-term fiscal framework has to be implemented, in order to ensure effectiveness and fiscal sustainability.
|Date of creation:||13 Nov 2009|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- N/A, 2009. "On the Recession," Local Economy, London South Bank University, vol. 24(3), pages 253-253, May.
- Torben M. Andersen, 2009. "Fiscal policy and the global financial crisis," Economics Working Papers 2009-07, Department of Economics and Business Economics, Aarhus University.
- Martin Feldstein, 2002. "The Role for Discretionary Fiscal Policy in a Low Interest Rate Environment," NBER Working Papers 9203, National Bureau of Economic Research, Inc.
- Vito Tanzi, 2008. "The role of the state and public finance in the next generation," OECD Journal on Budgeting, OECD Publishing, vol. 8(2), pages 1-27.
- Antonio Spilimbergo & Steven A. Symansky & Carlo Cottarelli & Olivier J Blanchard, 2009.
"Fiscal Policy for the Crisis,"
IMF Staff Position Notes
2008/01, International Monetary Fund.
- Anna Stangl, 2007. "World Economic Survey," Chapters, in: Handbook of Survey-Based Business Cycle Analysis, chapter 5 Edward Elgar Publishing.
- Sanjeev Gupta & Carlos Mulas-Granados & Emanuele Baldacci, 2009. "How Effective is Fiscal Policy Response in Systemic Banking Crises?," IMF Working Papers 09/160, International Monetary Fund.
- Paolo Mauro & Mark A Horton & Manmohan S. Kumar, 2009. "The State of Public Finances; A Cross-Country Fiscal Monitor," IMF Staff Position Notes 2009/21, International Monetary Fund.
- Tanzi, Vito, 2008. "The role of the state and public finance in the next generation," Seminarios y Conferencias 7107, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
- Ray Barrell & Tatiana Fic & Iana Liadze, 2009. "Fiscal Policy Effectiveness in the Banking Crisis," National Institute Economic Review, National Institute of Economic and Social Research, vol. 207(1), pages 43-50, January.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:18676. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.