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Challenges and Vulnerabilities on Public Finance Sustainability. A Romanian Case Study

Ionel Bostan (), Carmen Toderașcu () and Anca Florentina Gavriluţă (Vatamanu) ()
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Ionel Bostan: Faculty of Law and Administrative Sciences, Stefan cel Mare University of Suceava, 13 Universităţii, 720229 Suceava, Romania
Carmen Toderașcu: Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, 11 Carol I, 700506 Iaşi, Romania
Anca Florentina Gavriluţă (Vatamanu): Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, 11 Carol I, 700506 Iaşi, Romania

Journal of Risk and Financial Management, 2018, vol. 11, issue 3, 1-24

Abstract: Given the contradiction between the current demands for sustainability and the way that the financial system works, this paper explored in a retrospective and a prospective view, Romanian Public Finance Sustainability, highlighting the major challenges and vulnerabilities. Relating to the retrospective part, we concentrated mainly on empirical tests on Romanian government solvency between the period 1990–2020, by applying un it root and co-integration tests. To gain a better, general understanding of the behavior of policy-makers, in the second part we used a scenario analysis of budgetary adjustment in the short and medium run under alternative hypotheses. The results provided formal proof that policy makers decisions face critical and complex questions, and the way in which they manage fiscal stimuli has a direct implication on the sustainability of the country and on the lax implementation of fiscal policy.

Keywords: public finance; macro-economic variables; Johansen test; fiscal sustainability; reforms process (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2018
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