IMPACT OF CYCLICAL EVOLUTION ON BUDGET BALANCE- ROMANIA’S CASE

Alexandru Avram, Veronel Avram and Roxana Adriana Hetes-Gavra
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Alexandru Avram: West University of Timisoara Faculty of Economics and Business Administration
Veronel Avram: University of Craiova Faculty of Economics and Business Administration
Roxana Adriana Hetes-Gavra: West University of Timisoara Faculty of Economics and Business Administration

Annals of University of Craiova - Economic Sciences Series, 2014, vol. 1, issue 42, 144-149

Abstract: History has provided sufficient evidence that economic activity does not grow linearly and economic cycles can be easily distinguished, in which periods of growth are followed by periods of recession, stagnation, rising unemployment and widening budget deficits. Cyclical evolution impact on macroeconomic equilibrium requires us to move to a multiannual approach to budget balance and think about adjustments for the fiscal policy mix over the economic cycle, i.e. to pursue higher deficits in periods of recession as a result of tax incentives and some public investment expenditures absolutely necessary to resume growth and the deficits and public debt accumulated will be reduced in further periods.

Keywords: macroeconomic balance; stability; economic growth; budget deficit; public debt (search for similar items in EconPapers)
JEL-codes: G32 G39 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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