INEFFICIENCY OF PUBLIC INVESTMENT IN ROMANIA

According to Keynes, increasing of the public investment is one of the best solutions to economic recovery, since it causes strong effects upon the economic growth. However, according to recent studies, public investment expenditure generates less effect in the short term, due to the lags associated with the achievement of new project, but a larger long-term impact by stimulating potential GDP through increase of the capital stock and of total factor productivity. In this study I have aimed to analyze the influence of public capital spending on economic growth and to explain how it could generate sustainable recovery of the Romanian economy. My conclusion is that increasing of the public investment, which took place during the economic expansion of the Romania has generated a little effect, given that many of the projects started in one year were not funded in the following financial years.public investment; economic growth; fiscal multiplier

WHY IS THE FISCAL POLICY IMPOSED BY IMF PRO-CYCLIC?

The economies which appealed to the IMF loan faced difficulties related to financing the public and the private foreign debt. IMF imposed the promoting of a restrictive fiscal policy to the beneficiary countries, in order to decrease the budget deficit, e: fiscal policy stance, structural budget balance, IMF agreement, economic recession

THE ANALYSIS OF POTENTIAL OUTPUT GROWTH IN THE EURO AREA

The objective of this paper is to apply some decompositions of the production function to explain the impact of the labour, capital and factor productivity (TFP) upon the economic growth in the euro area. To achieve this objective, I have used the results obtained in the economic literature, such those of the McQuinn si Whelan (2006). Based on preliminary results, I have made an exercise to estimate the potential output growth in the Euro area in the next year according actually trend.euro area; economic growth; total factor productivity (TFP); labour productivity; Solow model. REL Classification: 8E; 3D.

THE ANALYSIS OF EQUITY-EFFICIENCY TRADE-OFF IN THE EUROPEAN UNION ECONOMY

The European Union’s economic evolution for the last sixty years is specific to the long term stages of the economic cycle, of Kondratieff type. The economic expansion period has been characterized by a higher efficiency level (growth in productivity, in the labour occupation degree) which favoured the reducing of the inequalities related to incomes through the redistribution process. The economic recession stage showed that, under the terms of an increased unemployment, of a low aggregate demand and of a less flexible aggregate supply, the economic efficiency level is relatively lower. On these conditions, the providing of social equity (of the cohesion) will affect negatively the efficiency degree, fact which will extend the period of economic recession within The European Union.economic growth, labour productivity, economic recession, total factor productivity

IS READY ROMANIA FOR EURO ADOPTION? FROM STRUCTURAL CONVERGENCE TO BUSINESS CYCLE SYNCHRONIZATION

The objective of this study is to identify gaps between economic and commercial structures between Romania and the euro area and to explain whether the results obtained justify recently decision to delay euro adoption beyond 2015. According to theory of optimum currency areas, the existence of similar economic structures, increasing trade integration and synchronization of business cycles with monetary union will provide greater symmetry of shocks between Romania and the euro area. If the shocks are more symmetrical, then common monetary policy of the European Central Bank will act as a tool to neutralize the shocks in the case of Romania, and the euro adoption would have fewer adverse effects. To meet the research objective, we have structured this paper into three parts. In the first part we referred to the importance of the proposed theme in the economic literature. In the second part, we used several statistical methods to identify how divergent is Romania relative to the euro area economies. The results obtained show increasing divergence between economic structures until 2009 year using the NACE 6 methodology. In fact, Romania has the most divergent structure in EU-27 countries, being characterized by lowest contribution of services to GDP. However, structural differences do not constitute an obstacle to euro adoption, as long as Romania becomes more commercially integrated with other European countries. Thus, Romania is the seventh economy in terms of trade with the EU-27 (73.3% of exports and 74.3% of imports), and the degree of convergence between the structure of exports and imports have increased significantly compared with 2000 year. In the third part, we estimated the degree of synchronization of business cycles between Romania and the euro area, based on Hodrick-Prescott filter. Results showed an increasing correlation of business cycles as a result of increasing industrial activity and export synchronization.euro area, sectoral divergence, business cycle synchronization, Krugman index, Hodrick-Prescott filter

Public Pensions Reform in Romania. How Affect the Public Finance Sustainability?

This paper deals with the problem of the public pension system’s sustainability in Romania and its impact upon the sustainability of the public finance. Thus, the public pension deficit increased in the last three years, caused by the unsustainable increase of pensions during expansionary years and by decrease of number of taxpayers in the economy. Unfortunately, the pressure on public pension system will continue in the next decades due to decline of the total population and of the working age population and to increasing share of the older people. The first part of the paper is an explanation for the factors which affect the public pension system, and it presents this system’s vulnerabilities. The second part is a brief presentation of the effects of the reforms made after December ’89, with reference to the public pension system. The third part outlines the impact of the unitary pension law upon the improvement of the balancing position of the public pension system. The last part makes an analysis for the budget impact of the unitary pension law, outlining the comparison between the basic scenario – keeping the current system and the alternative scenario, which provides a rich package of reforms with reference to this field.public pensions system, private pensions system, finance sustainability, reforms, ageing problem

Two Different Views on Monetary Policy Impact: The New Consensus and Post-Keynesian Economics

The objective of this study is to make a synthesis of the differences between two new macroeconomic views. A New Consensus has arisen among neoclassical and New-Keynesian economists, such as Romer, Taylor and Walsh. This new view seeks to redefine the application of monetary policy by re-specifying the most appropriate monetary rule, which is used for inflation targeting. The framework of the monetary policy impact requires the usage of a expectations augmented Phillips curve, characterized through the lack of trade-off inflation-unemployment in the long-run. Post-keynesian macroeconomic critical, whose promoters are Arestis, Lavoie and Satterfield, argues that for most of the production levels obtained output change has no effect on inflation. This is a re-formulation of the Keynesian aggregate supply curve, which is entirely horizontal

WHY IS THE FISCAL POLICY IMPOSED BY IMF PRO-CYCLIC?

The economies which appealed to the IMF loan faced difficulties related to financing the public and the private foreign debt. IMF imposed the promoting of a restrictive fiscal policy to the beneficiary countries, in order to decrease the budget deficit,

The Structural Convergence of the Romanian Economy. Comparative Analysis

This study analyzes the particularity of the structural adjustment process of the Romanian economy compared to the evolution of the new member countries of the European Union. Romania registers the highest level of structural “divergence” compared with the European average. This fact can decrease the impact of the application of common policies in the Romanian economy. Also the interconnection between income convergence and the structural convergence of the economic activities is a negative one, being different from the one of the new EU members

The Estimation of the Cointegration Relationship between the Economic Growth, Investments and Exports. The Romanian Case

This paper attempts to analyze the relationship between exports, investments and economic growth in Romania. For the search of this relationship I use a multivariate autoregressive VAR model. The results of cointegration analysis showed that there is one cointegrated vector among exports, investments and economic growth. Granger causality tests based on error correction models (ECM) have indicated that investment and export influences the steady-state level of GDP