USING SPLINE FUNCTIONS FOR THE SUBSTANTIATION OF TAX POLICIES BY LOCAL AUTHORITIES

Bolos Marcel (), Pop Razvan () and Otgon Cristian ()
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Bolos Marcel: University of Oradea, Faculty of Economics
Pop Razvan: University of Oradea, Faculty of Economics
Otgon Cristian: University of Oradea, Faculty of Economics

Annals of Faculty of Economics, 2011, vol. 1, issue 1, 336-347

Abstract: The paper aims to approach innovative financial instruments for the management of public resources. In the category of these innovative tools have been included polynomial spline functions used for budgetary sizing in the substantiating of fiscal and budgetary policies. In order to use polynomial spline functions there have been made a number of steps consisted in the establishment of nodes, the calculation of specific coefficients corresponding to the spline functions, development and determination of errors of approximation. Also in this paper was done extrapolation of series of property tax data using polynomial spline functions of order I. For spline impelementation were taken two series of data, one reffering to property tax as a resultative variable and the second one reffering to building tax, resulting a correlation indicator R=0,95. Moreover the calculation of spline functions are easy to solve and due to small errors of approximation have a great power of predictibility, much better than using ordinary least squares method. In order to realise the research there have been used as methods of research several steps, namely observation, series of data construction and processing the data with spline functions. The data construction is a daily series gathered from the budget account, reffering to building tax and property tax. The added value of this paper is given by the possibility of avoiding deficits by using spline functions as innovative instruments in the publlic finance, the original contribution is made by the average of splines resulted from the series of data. The research results lead to conclusion that the polynomial spline functions are recommended to form the elaboration of fiscal and budgetary policies, due to relatively small errors obtained in the extrapolation of economic processes and phenomena. Future research directions are taking in consideration to study the polynomial spline functions of second-order, third-order, Hermite spline and cubic splines of class C2 .

Keywords: fiscal policy; budget deficits; spline functions; budget justification; debt crisis (search for similar items in EconPapers)
JEL-codes: C29 H72 (search for similar items in EconPapers)
Date: 2011
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