Analyzing Fiscal Balance Evolution for Developed and Emerging Countries

Dinca Gheorghita (), Dinca Marius Sorin () and Popione Catalina ()
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Dinca Gheorghita: Department of Finance and Accounting, Transilvania University of Brasov, Romania
Dinca Marius Sorin: Department of Finance and Accounting, Transilvania University of Brasov, Romania
Popione Catalina: Transilvania University of Brasov, Romania

Scientific Annals of Economics and Business, 2016, vol. 63, issue 3, 299-310

Abstract: The purpose of our paper is to analyze the main factors which influence fiscal balance’s evolution and thereby identify solutions for configuring a sustainable fiscal policy. We have selected as independent variables some of the main macroeconomic measures, respectively public debt, unemployment rate, economy openness degree, population, consumer goods’ price index, current account balance, direct foreign investments and economic growth rate. Our research method uses two econometric models applied on a sample of 22 countries, respectively 14 developed and 8 emergent. The first model is a multiple regression and studies the connection between the fiscal balance and selected independent variables, whereas the second one uses first order differences and introduces economic freedom as a dummy variable to catch the dynamic influences of selected measures upon fiscal result. The time interval considered was 1999-2013. The results generated using the two models revealed that public debt, current account balance and economic growth significantly influence the fiscal balance. As a consequence, the governments need to plan and implement a fiscal policy which resonates with economy priorities and the phase of the economic cycle, as well as ensure a proper management of the public debt, stimulate sustainable economic growth and employment.

Keywords: fiscal balance; public debt; economic growth; fiscal sustainability (search for similar items in EconPapers)
JEL-codes: H62 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:aicuec:v:63:y:2016:i:3:p:299-310:n:1

DOI: 10.1515/saeb-2016-0123

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