FISCAL POLICY DYNAMICS, EMPLOYMENT AND CONSUMPTION

Cornelia Văceanu and Petronela Evelina Bălu
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Cornelia Văceanu: Bucharest University of Economic Studies
Petronela Evelina Bălu: Bucharest University of Economic Studies

SEA - Practical Application of Science, 2015, issue 8, 183-189

Abstract: The aim of this paper is to analyse both in theory and in practice fiscal policy effects on the employment rate. For example, even if taxation is one of the main instruments of fiscal policy of the government in reducing unemployment, high taxes reduce disposable incomes of consumers, which automatically leads to lower consumption and when consumers buy less, increases the odds that the unemployment increase. To highlight this we used the comparison of a dynamic influence of fiscal policy on macroeconomic variables with the empirical results from an identified multidimensional model. Data shows a positive conditional correlation between government expenditures increase and labour force supply.

Keywords: Fiscal policy; Employment; Consumption; Budget deficit (search for similar items in EconPapers)
JEL-codes: H20 H30 J20 J60 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:cmj:seapas:y:2015:i:8:p:183-189

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