THE FISCAL-BUDGETARY INFLUENCES ON THE ECONOMIC EQUILIBRIUM OF ROMANIA
THE FISCAL-BUDGETARY INFLUENCES ON THE ECONOMIC EQUILIBRIUM OF ROMANIA

Summary/Abstract: The State may intervene in the economy through fiscal-budgetary policy. To influence the dynamics of economic equilibrium through measures of fiscal-budgetary nature, the state uses instruments such as taxes, public spending etc. The changes in the level of public spending and taxes may cause fluctuations in aggregate demand. Thus, increased public spending and lower tax rate may lead to an increase of aggregate demand and, ultimately, to the increase of output. In Romania, fiscal-budgetary policy took certain effects reflected in the increase of aggregate demand, in the period 1991-2008. Increased aggregate demand led, ultimately, to a resize of output, which was reflected in an increase of GDP. The increase of demand was based on increasing debt. The domestic demand in Romania was satisfied on the basis of massive imports, which resulted in disrupting the trade balance. Fiscal-budgetary policy is a particularly important component of economic policy, especially in the financial crisis with which Romania is facing today.

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