Fiscal and Monetary Policies’ Impact on Investment in Romania

Avram Alexandru (), Hete? Roxana () and Crâ?neac Alexandru ()
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Avram Alexandru: Faculty of Economics and Business Administration, West University of Timi?oara
Hete? Roxana: Faculty of Economics and Business Administration, West University of Timi?oara
Crâ?neac Alexandru: Faculty of Economics and Business Administration, West University of Timi?oara

Ovidius University Annals, Economic Sciences Series, 2014, vol. XIV, issue 2, 423-428

Abstract: In this paper we intend to analyze the effects of fiscal and monetary policies on investment in Romania using a Vector Autoregression (VAR) model. We used quarterly data provided by the National Statistics Institute and Eurostat. The independent variables that we included in our study are: private consumption, government debt, gross fixed capital formation, inflation, ROBOR interest rate, government consumption, government revenue and GDP. We analyzed the influence of fiscal and monetary policies both on the short term and on the long term. Using impulse function specific to Vector Autoregressive (VAR) model, we identified the effects of fiscal and monetary policies components in Romania on the investment by Cholesky impulse functions. Our findings suggest that introduction of the flat rate tax for both corporate income and personal income had a significant positive effect on investment. The increase in VAT standard rate had a negative impact on inflation, but is positively related to investment.

Keywords: fiscal policy; monetary policy; VAR; gross fixed capital formation (search for similar items in EconPapers)
JEL-codes: E61 E62 E63 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:ovi:oviste:v:xiv:y:2014:i:2:p:423-428

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