Annals of the University of Oradea: Economic Science (Jul 2015)
CONSIDERATIONS REGARDING MONETARY POLICY IN ROMANIA
Abstract
The main objective of this paper is to study the Romania’s monetary policy, in the period 1996-2013. The research starts with a theoretical review of the monetary policy, whose main purpose is influencing the broad money supply and the lending requirements and the institution in charge of achieving this objective is the Central Bank, highlighting its impact upon the economic activity, through the Keynesian analysis model IS-LM and a correlation between the monetary policy measures and the phases of the economic cycle whose results indicate that during the recession periods it is recommended to reduce interest rates in order to stimulate investments, by raising the money supply, and during the expansion period it is recommended to increase the interest rate in order to cut back the money supply. Starting from this premises, the research takes into account the study of the monetary policy measures adopted by the governmental authority of Romania, making a quantitative analysis of the main macroeconomic indicators: the real interest rate, the lending interest rate, the deposit interest rate and the broad money supply and through a multifactorial regression, highlighting the impact of the interest rates upon the monetary aggregate M2. Moreover, a comparison between the monetary policy measures adopted in Romania and the monetary policies recommended by specialized literature has been done, and the results have indicated that during recession periods the attention of the governmental authorities is focused upon adopting the right measures, but during the expansion periods this doesn’t happen. The results of this research highlight the economic situation in Romania and the way in which the governmental authority intervened, through the monetary policy measures, in order to mitigate the negative effects of the cyclical fluctuations.
