Posted on 15 February 2014.
According to Mankiw (2000), fiscal policy in major macroeconomic models adversely affects the behavior of private agents as consumers and firms and they affect economic growth through investment and savings decisions. Increasing government spending will increase the aggregate demand for goods and services and money demand in the money market leading to an increase of interest rates while markets tend towards equilibrium. The increased interest rates affect negatively the level of private investment. To assess the effect of fiscal policy on economic growth generally are used the endogenous growth models, which include technological progress as an integrated part of this model. These models were called endogenous because they were taking into account long-term economic growth and were using endogenous mechanisms to explain its main source which is the technological progress. Endogenous growth models developed by Barro (1990), Mendosa, Milesi-Ferreti and Asea (1997) or even by other economists, predict that the fiscal policy can affect the level of product and the long run economic growth. This conclusion is analyzed in the theory of Barro (1990), which extends the model by including the fiscal policy. The Barro’s model is the model used in this paper to analyze the effect of the fiscal policy on economic growth in the case of Albania. The empirical work shows that all the variables, except inflation which according to theoretical expectations should have a negative effect, affect positively the economic growth. This positive relation between these variables can be explained by investments in infrastructure and other priority sectors that the government has done during all this period.
Empirical Evidence of Fiscal Policy Impact on Endogenuos Models of Economic Growth - the Case of Albania (281.3 KiB, 33 hits)
Posted in Economics, Volume IV, Issue no. 1
Posted on 15 June 2013.
This paper analyses the impact of development and efficiency of financial sector on economic growth of a group of selected developing countries using a cross-country data averaged over the period 2005-2009. The results show that the impact of financial sector efficiency on economic growth is significantly positive for developing countries. For a sample of 50 developing countries the effect of financial sector development and financial sector efficiency is positive and highly significant. The sensitivity analysis also shows that the relationship remain positive and significant no matter what combination of the omitted variables are used in the basic model. Thus, our findings support the core idea that development and efficiency of financial sector stimulates economic growth.
Impact of Development and Efficiency of Financial Sector on Economic Growth: Empirical Evidence from Developing Countries (701.6 KiB, 275 hits)
Posted in Economics, Volume III, Issue no. 3
Posted on 15 December 2012.
A significant coordinate of tax policy aims at the source of tax revenuese and share of tax revenues collected from the public, private sector, or from individuals in the GDP.
Collecting fees and taxes in Romania is marked, on one side by a business environment in difficulty (insolvency and bankruptcy cases increased), and on the other hand, by a declining tax base due to the limitation of business of economic operators in recent years. Thus, although by the tax administration policy, measures are provided for enhancing transparency, stability and predictability of the tax framework, it encounters major restrictions, a dynamic and more efficient collection being required.
Occurrence and evolution of tax evasion and low level of payment voluntary compliance of taxpayers should lead to the growth of performance of tax office in achieving the role of recovery of budget revenues.
As a rule, the economically advanced countries have a more developed level of direct taxes than the one of the indirect taxes, which is not also the case of developing countries. In their case, it is natural that indirect taxes should prevail because, on the one hand, it is pretty difficult to keep a record of the taxable revenues (there are many and of little value), and, on the other hand, an indirect tax collection is more convenient and requires a relatively low cost.
Contribution of Taxes to the Making-Up of Budget Revenues in the Economic Growth (502.3 KiB, 252 hits)
Posted in Economics, Volume II, Issue no. 6
Posted on 15 October 2012.
The impact of fiscal policy on economic growth is a complex and contradictory topic in finance debates. Government influences real economy through the impact of public revenues and expenditures on the quantity and quality of production factors, labor and capital. High taxation for supporting big public sector can impede growth. On the other hand, some of the public expenditures can stimulate growth. This opposite effects of the public sector’s intervention through fiscal policy rise the debate about the performance of public sector in stimulating economic growth. The aim of this paper is to analyze the differences between developed UE countries and former communist EU countries regarding the public sectors and economic growth
Correlation Between Government and Economic Growth - Specific Features for 10 Nms (302.7 KiB, 277 hits)
Posted in Knowledge Management, Volume II, Issue no. 5
Posted on 15 June 2012.
This article aims to demonstrate the confirmation or the refutation of the hypothesis that there is a connection between fiscal policy and economic development. The study begins with an overview of the main theoretical contributions. A few indicators that give the measure of the economic development are analysed for the sample of the Central and South Eastern European countries, members of the EU. The empirical analysis seeks to establish the relevance of the main determinants of the economic development (GDP per capita) and the three levers of the fiscal policy (fiscal pressure, the share of public expenditure in GDP and budgetary balance in the share of GDP), for each country, of the sample of the 12 countries of Central and South Eastern Europe, the new members of the European Union, during 2001-2010.
Econometric model Concerning The Impact Of The Fiscal Policy Upon The Economic Development. The Case Of The Countries From Central And Eastern Europe, Members Of The European Union (265.0 KiB, 462 hits)
Posted in Economics, Volume II, Issue no. 3
Posted on 15 December 2011.
The present scientific work aims at establishing the connection between the sustainability and the management of public debt both as hot stringent issues, and as strategic components of the state public policies. The authors analyze the relationship between public debt and some macroeconomic variables, by using a model structured on two time periods. Also, the study the same relationship based on data concerning public debt as a quota of the GDP (%) and the economic growth as a quota of the GDP (%) in 2009, by applying the econometric models for several European Union members.
Therefore, the results of the present research highlight the role played by the debt management in ensuring the debt sustainability and also prove that the connection between the economic growth and the public debt is indirect and only medium strong, due to the results obtained after applying a unifactorial econometric model.
Sustainability, Management and Policy of Public Debt (946.9 KiB, 498 hits)
Posted in Economics, Issue no. 7
Posted on 15 December 2011.
This paper discusses the Growth Diagnostics approach developed by Hausmann, Rodrik and Velasco. The approach suggests an analytical framework to identify the most binding constraints that hamper economic growth in a specific country at a specific point in time. Aiming at higher-order principles of neoclassical economics, Growth Diagnostics allows policy- makers to creatively develop policy designs which address the most binding constraint while taking into account relevant factors of their country’s economic, political and social context. Most importantly, it considers both orthodox and heterodox policies as possible solutions to ignite growth. Against the backdrop of changing economic policy advice from the big push idea to the augmented Washington Consensus, the authors analyze the reasoning behind the Growth Diagnostics approach. Criticisms by academics and practitioners serve as a basis for a discussion on the approach’s possible shortcomings. The authors conclude that Growth Diagnostics is a useful tool to inform growth strategies in developing countries, whereas the new framework’s flexibility is discerned as both its essential strength and its main weakness. Among the approach’s most important contributions are its explicit renunciation of economic rules of thumb in favor of fact-based diagnosis and context-specific policy design, its ability to identify reform priorities based on expected impact as well as its caution with respect to potentially adverse second-best interactions between different policy reforms.
Growth Diagnostics: Strengths and Weaknesses of a Creative Analytical Framework to Identify Economic Growth Constraints in Developing Countries (742.6 KiB, 1,099 hits)
Posted in Economics, Issue no. 7
Posted on 15 October 2011.
The current society has brought in the foreground of its preoccupations the foreign trade as a factor of recovery and development, especially in the case of the emergent states.
Starting with Adam Smith and David Ricardo, theories of the foreign trade have been built to demonstrate the advantages that trades might bring to the partners. There are “voices” that support the idea of the inferiority of emergent economies in the international trade plan, so in the present papers we aim, without condemning this opinion, at arguing that in nowadays society foreign trade remains the major and most direct way, for the emergent economies, of access to knowledge and to its results.
Economies of Emerging States and Foreign Trade in the Knowledge Economy (717.1 KiB, 544 hits)
Posted in Economics, Issue no. 6