<abstract xmlns="http://www.w3.org/1999/xhtml"><p>Nowadays, economic actors are demanding more and more efficient government spending, therefore higher fiscal multipliers. As the ratio between public revenues and GDP is low in Romania compared with the European Union average, Romania may not be able to decrease taxes in order to improve its fiscal multipliers. A downward trend of public expenses could affect even more the quality of public services. Rather than changing the size of the public budget relative to GDP, one should consider structure changes of the public budget. The obvious choice for the policymakers would be to increase the capital expenditure and decrease the current expenses. Investment is usually the engine of growth, but in Romania, consumption has been always been considered the driver of economic growth. Firstly, we will check whether investment is an important driver of economic growth. We will confirm this hypothesis by using cross-correlations and Granger causality tests on the Hodrick-Prescott cycles of GDP and Gross fixed capital formation. Afterwards, we can continue our study to test via a multiple linear regression which type of expenditure is better correlated with GDP. After obtaining the results, we will study if the tendency during 2004-2018 was towards maximizing the fiscal multipliers.</p></abstract>

Nowadays, economic actors are demanding more and more efficient government spending, therefore higher fiscal multipliers. As the ratio between public revenues and GDP is low in Romania compared with the European Union average, Romania may not be able to decrease taxes in order to improve its fiscal multipliers. A downward trend of public expenses could affect even more the quality of public services. Rather than changing the size of the public budget relative to GDP, one should consider structure changes of the public budget. The obvious choice for the policymakers would be to increase the capital expenditure and decrease the current expenses. Investment is usually the engine of growth, but in Romania, consumption has been always been considered the driver of economic growth. Firstly, we will check whether investment is an important driver of economic growth. We will confirm this hypothesis by using cross-correlations and Granger causality tests on the Hodrick-Prescott cycles of GDP and Gross fixed capital formation. Afterwards, we can continue our study to test via a multiple linear regression which type of expenditure is better correlated with GDP. After obtaining the results, we will study if the tendency during 2004-2018 was towards maximizing the fiscal multipliers.

Theoretical and Practical Aspects Concerning Romania’s Public Finance Management within the Present European Context

International conference KNOWLEDGE-BASED ORGANIZATION

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Nowadays, economic actors are demanding more and more efficient government spending, therefore higher fiscal multipliers. As the ratio between public revenues...

Theoretical and Practical Aspects Concerning Romania’s Public Finance Management within the Present European Context

Published Online: Jul 20, 2020

Page range: 128 - 133

DOI: https://doi.org/10.2478/kbo-2020-0064

Keywords
public finances, public expenditure, public budget, budget execution

© 2020 Cătălin Florin Zeti et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Theoretical and Practical Aspects Concerning Romania’s Public Finance Management within the Present European Context

Published Online: Jul 20, 2020

Page range: 128 - 133

DOI: https://doi.org/10.2478/kbo-2020-0064

Keywordspublic finances, public expenditure, public budget, budget execution

© 2020 Cătălin Florin Zeti et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Keywords
public finances, public expenditure, public budget, budget execution