Bunea-Bontas, Cristina Aurora and Petre, Mihaela Cosmina (2009): Fiscal Policy during the current Crisis.
Download (258kB) | Preview
Fiscal policy is an important government tool for managing the economy, having the ability to affect the total amount of output produced - GDP. Changes in the level and composition of government spending, taxation or other instruments of fiscal policy have impact on aggregate demand, the pattern of resource allocation, and the distribution of income. The article shows the mechanisms through which fiscal policy stabilizes the business cycle, and the specific requirements for fiscal policy during recession; the practical problems that may occur in implementing an effective fiscal policy are emphasized. Regarding the circumstances of the current financial and economic crises, the revival of the fiscal policy as a macroeconomic policy faces high expectations as to what it can accomplish. The paper highlights the composition of fiscal stimulus package, and reviews the specific fiscal stimulus plans adopted so far by different countries and their objectives. The final section contains an overview of the Romanian government response to the current crises, regarding fiscal policy. The conclusion is that Romania has conducted an inconsistent and ineffective fiscal policy, which has contributed to macro-economic and fiscal imbalances and to an increased fiscal pressure on business. Therefore, a medium-term fiscal framework has to be implemented, in order to ensure effectiveness and fiscal sustainability.
|Item Type:||MPRA Paper|
|Original Title:||Fiscal Policy during the current Crisis|
|Keywords:||fiscal policy, automatic stabilizers, discretionary fiscal policy, fiscal stimulus, government spending, taxation|
|Subjects:||E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E62 - Fiscal Policy
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E65 - Studies of Particular Policy Episodes
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
|Depositing User:||Cristina Aurora Bunea-Bontas|
|Date Deposited:||16. Nov 2009 19:34|
|Last Modified:||08. Jan 2014 04:11|
Andersen, Camilla. 2008. “Financial Crisis Response. IMF Spells out Need for Global Fiscal Stimulus”, IMF Survey Magazine: Interview, IMF Survey online, http://www.imf.org/external/pubs/ft/survey/so/2008/INT122908A.htm.
Andersen, Torben M. 2009. “Fiscal policy and the global financial crisis”, Economics Working Paper prepared for the Swedish Globalisation Council, ftp://ftp.econ.au.dk/afn/wp/09/wp09_07.pdf, pp. 3, 6.
Baldacci, Emanuele, Gupta, Sanjeev, and Mulas-Granados, Carlos. 2009. “How Effective is Fiscal Policy Response in Systemic Banking Crises?”, IMF Working Paper WP/09/160, http://www.imf.org/external/pubs/ft/wp/2009/wp09160.pdf, pp. 27-28.
Banco de Portugal. 2009. “Annual report, Report and Financial Statement 2008”, http://www.bportugal.pt/en-US/EstudosEconomicos/Publicacoes/RelatorioAnual/Publications/rel_08_e.pdf, pp. 65.
Barrell, Ray, Fic, Tatiana, and Liadze, Iana. 2009. “Fiscal policy effectiveness in the banking crisis”, National Institute Economic Review, http://www.allbusiness.com/economy-economic-indicators/economic-policy/11794366-1.html, pp. 3-6.
Belke, Ansgar. 2009. “Should fiscal stimulus packages be coordinated in times of crisis?”, http://www.eurointelligence.com/article.581+M5c76c7d9326.0.html.
Business Monitor International. 2009. “Emerging Europe Monitor: South East Europe”, Business Monitor International Volume 16 Issue 10, October 2009, www.emergingeuropemonitor.com, pp. 4.
Business Monitor International. 2009. “Emerging Europe Monitor: South East Europe”, Business Monitor International Volume 16 Issue 11, November 2009, www.emergingeuropemonitor.com, pp. 4.
Commission of the European Communities. 2008. “A European Economic Recovery Plan”, COM(2008) 800 Final, http://ec.europa.eu/commission_barroso/president/pdf/Comm_20081126.pdf, pp. 7-13.
Corsetti, Giancarlo, and Müller, Gernot. 2008. “The effectiveness of fiscal policy depends on the financing and monetary policy mix”, http://www.voxeu.org/index.php?q=node/2554
Cottarelli, Carlo. 2009. “Fiscal Policy and the Global Crisis”, Presentation at Koç University, Istanbul, http://www.ku.edu.tr/ku/images/EAF/20090609_cottarelli.pdf, pp. 2.
Dayton-Johnson, Jeff. 2008-2009. “Is fiscal policy back? An emerging markets perspective”, OECD Observer No 270/271, http://www.oecdobserver.org/news/fullstory.php/aid/2781.
Ernst & Young. 2009. Romania monthly economic review January 2009, Romanian Business Digest, International Business Promotion, http://rbd.doingbusiness.ro/en/latest-articles/1/119-romania-monthly-economic-review-january-2009.html, pp. 1.
European Commission. 2009. “Economic Forecast Spring 2009”, European Economy No 3/2009, http://ec.europa.eu/economy_finance/publications/publication15048_en.pdf, pp. 40, 98-99.
European Commission. 2009. “Economic Crisis in Europe: Causes, Consequences and Responses”, European Economy No 7/2009, http://ec.europa.eu/economy_finance/publications/publication15887_en.pdf, pp. 44-45, 57-59, 67-70.
Feldstein, Martin. 2002. “The Role for Discretionary Fiscal Policy in a Low Interest Rate Environment”, NBER Working Paper No 9203, abstract, http://www.nber.org/papers/w9203.
Fernández-Ansola, Juan J., and Jaeger, Albert. 2008. Fiscal Policy Principles for Romania’s Era of Uncertainty, IMF – Regional Office for Romania and Bulgaria, http://www.fmi.ro/index.php?pid=96&lg=en&presa.
González-Páramo, José Manuel. 2009. “Fiscal policy and the financial crisis: the need for an effective exit strategy”, Speech at the CFS conference The European Central Bank and its Watchers XI, Frankfurt am Main, http://www.ecb.int/press/key/date/2009/html/sp090904_2.en.html.
Horton, Mark, Kumar, Manmohan, and Mauro, Paolo. 2009. “The State of Public Finances: A Cross-Country Fiscal Monitor”, IMF Staff Position Note SPN/09/21, http://www.imf.org/external/pubs/ft/spn/2009/spn0921.pdf, pp. 4-5.
International Monetary Fund. 2008. “World Economic Outlook October 2008: Financial Stress, Downturns, and Recoveries”, World Economic and Financial Surveys, http://www.imf.org/external/pubs/ft/weo/2008/02/pdf/text.pdf, pp. 160, 163
International Monetary Fund. 2009. “The State of Public Finances: Outlook and Medium-Term Policies After the 2008 Crisis”, Companion Paper, https://www.imf.org/external/np/pp/eng/2009/030609a.pdf, pp. 5, 10-11, 14-16.
International Monetary Fund. 2009. “World Economic Outlook October 2009: Sustaining the Recovery”, World Economic and Financial Surveys, http://www.imf.org/external/pubs/ft/weo/2009/02/pdf/text.pdf, pp. 27-28.
Kraay, Aart and Servén, Luis. 2008. “Fiscal Policy Responses to the Current Financial Crisis: Issues for Developing Countries, Macroeconomics and Growth Research”, http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTPROGRAMS/EXTMACROECO/0,,contentMDK:22058212~pagePK:64168182~piPK:64168060~theSitePK:477872,00.html.
Padoan, Pier Carlo. 2009. “Fiscal Policy in the Crisis. Impact, Sustainability, Long Term Implications”, Presentation given at the ADBI-PRI Conference on Global Financial and Economic Crisis – Europe in Crisis?: Lessons for Asia and from Japan, Tokyo, http://www.adbi.org/conf-seminar-papers/2009/07/22/3234.fiscal.policy.crisis, pp. 9-10, 12-13.
Schaechter, Andrea. 2009. “Fiscal Implications of the Crisis for the EU: The European Commission’s Latest Analysis”, IMF Public Financial Management Blog, http://blog-pfm.imf.org/pfmblog/2009/07/fiscal-implications-of-the-crisis-for-the-eu-the-european-commissions-latest-analysis.html.
Scott, Alasdair. 2008. “Policy Responses to Slowdowns: Making Fiscal Stimulus Effective during Downturns”, IMF Survey Magazine, http://www.imf.org/external/pubs/ft/survey/so/2008/RES100208B.htm.
Spilimbergo, Antonio, Symansky, Steve, Blanchard, Olivier, and Cottarelli, Carlo. 2008. “Fiscal Policy for the Crisis”, IMF Staff Position Note SPN/08/01, http://www.imf.org/external/pubs/ft/spn/2008/spn0801.pdf, pp. 4-5.
Spilimbergo, Antonio, Symansky, Steve, Blanchard, Olivier, and Cottarelli, Carlo. 2009. “Fiscal Policy for the Crisis”, http://www.voxeu.org/index.php?q=node/3055.
Stangl, Anna, and Nerb, Gernot. 2009. “CESifo World Economic Survey August 2009”, Ifo World Economic Survey (WES) Volume 8 No 3, Ifo Institute for Economic Research, http://www.cesifo-group.de/pls/guestci/download/CESifo%20World%20Economic%20Survey%202009/WES-3-2009.pdf, pp. 7.
Tanzi, Vito. 2008.” The Role of the State and Public Finance in the Next Generation”, OECD Journal on Budgeting, Volume 8, No 2, pp. 17-18, http://www.oecd.org/dataoecd/43/0/43410951.pdf.
Terrones, Marco E., Scott, Alasdair, and Kannan, Prakash. 2009. “Global Recession to Be Long, Deep with Slow Recovery”, IMF Survey Magazine, http://www.imf.org/external/pubs/ft/survey/so/2009/res041609b.htm.
The World Bank. 2007. “Fiscal Policy and Economic Growth. Lessons for Eastern Europe and Central Asia”, The International Bank for Reconstruction and Development/The World Bank, http://siteresources.worldbank.org/INTECA/Resources/257896-1182288383968/FiscalPolicy&EconomicGrowthinECA_FullReport.pdf, pp. xxiii.
Weil, David N. 2008. “Fiscal Policy”, Library of Economics and Liberty, The Concise Encyclopedia of Economics, http://www.econlib.org/library/Enc/FiscalPolicy.html.
“Automatic stabilizers”. AmosWEB Encyclonomic WEB*pedia, http://www.amosweb.com.
“Discretionary Fiscal Policy and Automatic Stabilizers”, http://www.investopedia.com/study-guide/cfa-exam/level-1/macroeconomics/cfa24.asp.
“Fiscal policy”, AmosWEB Encyclonomic WEB*pedia, http://www.amosweb.com.
“Fiscal policy”, http://en.wikipedia.org/wiki.
“How might Governments use Fiscal Policy to end a Recession, what practical difficulties might they have?”, http://www.buythemap.com/Articles/Fiscal_Policy_to_End_Recession.html.