THE ADEQUACY OF ROMANIAN FISCAL POLICY TO CURRENT CONDITIONS

Abstract

This paper aims to make a review of the Romanian fiscal policy appropriateness to the new conditions imposed by socio-economic catching separating us from the developed countries of the European Union. In the last three decades we are witnessing due to changes in national economies trade liberalization in the context of globalization. The analysis deals with issues of budget deficits, which are the main cause of sovereign debt crisis in Europe and solutions to rebalance the budget. The Keynesian and the multiplier mechanism solution is considered in economy, proposed by using public savings spending. The automatic stabilizers and their degree of efficiency in emerging economies solution is also considered. Finally, we show an analysis of tax rate systems used in three of the most developed EU countries compared with the tax rate used in Romania. Although facing large state budget deficits, Romania, in years of economic crisis, has made spending mitigation measures, which led to the contraction of consumption, the measures having a pro-cyclical nature. The analysis is considering a restructuring of the tax system in order to rearrange the tax burden as a means of mitigating the economic crisis.

Keywords

• globalization, fiscal policy, budget deficits, tax rates