BUDGETARY POLICY - A TOOL FOR MITIGATING CYCLIC FLUCTUATIONS. STUDY CASE FOR ROMANIA, 1996-2011

Abstract

As part of a broader work, the object of this article is the study of budgetary policy, as a tool formitigating cyclic fluctuations in the economy. The following analysis indicators were used: public spending foreconomic actions, the real Gross Domestic Product and the structural budget deficit, on the basis of which thetype of budgetary policy adopted in Romania between 1996 and 2011 was established. The economic spendingand the GDP are expressed in millions of RON, comparable prices, the switch to current prices was achievedwith the aid of the Consumer Price Index, with 2012 as the baseline year, and the structural budget deficit isexpressed as a percentage of the GDP and were taken from the database of the National Statistics Institute andof the European Commission. The research carries out a review of the literature regarding budgetary policy, theway in which this contributes to the mitigation of cyclic fluctuations and identifies the budget measures taken inRomania between 1996 and 2011, with an emphasis on analysing public spending for economic actions. Then,through a quantitative analysis and an econometric model, it underlines the influence of public spending foreconomic actions on the Romania's real GDP and identifies the budgetary policy implemented by Romania. Theresults of the research emphasize Romania's economic condition, as well as the measures taken by thegovernment authorities in view of mitigating the cyclic fluctuations in the economy.

Keywords

• budgetary policy
• economic expenditures
• the structural budget deficit
• cyclical fluctuations