INEFFICIENCY OF PUBLIC INVESTMENT IN ROMANIA

Abstract

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