Estimated Reaction Function of Fiscal Policy in Romania

Camelia Moraru () and Norina Popovici ()
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Camelia Moraru: "Dimitrie Cantemir" Christian University, Constanta
Norina Popovici: „Ovidius” University, Faculty of Economic Sciences, Constanta

Ovidius University Annals, Economic Sciences Series, 2015, vol. XV, issue 2, 146-149

Abstract: Romanian fiscal policy effectiveness can be assessed using fiscal policy reaction function, which follows the reaction of the structural budget balance to the recorded changes of indebtedness, output gap and to their previous values. In economic literature, the reaction function is the most relevant method of testing the sustainability of public finances. Estimated reaction function using Cyclically Adjusted Balance model showed that in the period analyzed in Romania as promoted a procyclical fiscal policy and in the decision process, the fiscal policy decision-makers do not take into account past performance of structural budget deficit indicator.

Keywords: fiscal policy; structural budget deficit; output gap. (search for similar items in EconPapers)
JEL-codes: C32 E62 H60 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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