Romania's road to Euro zone. From structural balance to structural balance corrected for absorption

Aura-Gabriela Socol
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Aura-Gabriela Socol: Bucharest University of Economic Studies

Theoretical and Applied Economics, 2013, vol. XX, issue 2(579), 51-56

Abstract: The sovereign-debt crisis in the European Union has determined the necessity to reform the signal indicators for the analysis of the public finances' sustainability. In this context, many of the developing/emerging countries consider that the informational value provided by the structural budget balance indicator is insufficient, especially during the periods characterized by absorption. The present study suggests the transition from classical structural budget balance (CAB) in the structural balance corrected for absorption (CAAB) and supports the use of an improved indicator of the structural budget balance with a superior informational relevance for the macro-economic policies decision makers. Based on the economic literature we will demonstrate that the structural budget balance indicator should be improved, in order to also take into consideration the deviation of the current account balance from its sustainable level, particularly in the stage of the economic cycle characterized by high absorption.

Keywords: eurozone crises; structural budget balance; absorption adjusted structural budget balance. (search for similar items in EconPapers)
Date: 2013
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