Fiscal Policy during the current Crisis

Cristina Bunea-Bontas and Mihaela Cosmina Petre

MPRA Paper from University Library of Munich, Germany

Abstract: Fiscal policy is an important government tool for managing the economy, having the ability to affect the total amount of output produced - GDP. Changes in the level and composition of government spending, taxation or other instruments of fiscal policy have impact on aggregate demand, the pattern of resource allocation, and the distribution of income. The article shows the mechanisms through which fiscal policy stabilizes the business cycle, and the specific requirements for fiscal policy during recession; the practical problems that may occur in implementing an effective fiscal policy are emphasized. Regarding the circumstances of the current financial and economic crises, the revival of the fiscal policy as a macroeconomic policy faces high expectations as to what it can accomplish. The paper highlights the composition of fiscal stimulus package, and reviews the specific fiscal stimulus plans adopted so far by different countries and their objectives. The final section contains an overview of the Romanian government response to the current crises, regarding fiscal policy. The conclusion is that Romania has conducted an inconsistent and ineffective fiscal policy, which has contributed to macro-economic and fiscal imbalances and to an increased fiscal pressure on business. Therefore, a medium-term fiscal framework has to be implemented, in order to ensure effectiveness and fiscal sustainability.

Keywords: fiscal policy; automatic stabilizers; discretionary fiscal policy; fiscal stimulus; government spending; taxation (search for similar items in EconPapers)
JEL-codes: E62 E63 E65 (search for similar items in EconPapers)
Date: 2009-11-13
New Economics Papers: this item is included in nep-fdg, nep-mac and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/18676/1/MPRA_paper_18676.pdf original version (application/pdf)

Related works:
Journal Article: FISCAL POLICY DURING THE CURRENT CRISIS (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:18676

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().