Ion Pohoata

THE CHASM BETWEEN EXPECTED AND REAL PERFORMANCES OF ROMANIA– A PATH DEPENDENCE OUTCOME.

*Oana-Ramona Socoliuc 1 , Ion Pohoaţă 2 and Delia-Elena Diaconaşu 3 . 1. Assistant Professor Ph.D., Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iaşi, Romania. 2. Professor Ph.D., Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iaşi, Romania. 3. Research Scientist III, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iaşi, Romania.

Demand – supply – taxation in times of crisis

Abstract The confrontation of the two doctrines, the Keynesianism and the Supply-side economics highlight that the Laffer perspective is the way to achieve solid economic growth on the long way and aims the core of an “exit from crisis” policy. Therefore, this article aims to analyze the hypothesis that a high level of taxation and public spending deters productive behavior and reduces economic growth during recessions. In other words, an easy taxation and low unproductive public spending are desirable for both, the enterprising investor and the consumer. Using the example of Romanian fiscal policy, on one side, we validated within a Vector Error Correction framework that an increase in government revenues harms consumption, investment and the level of employment, in conjunction with a procyclical behavior of fiscal authorities. On the other side, our results showed some positive effects of an increased government expenditures on consumption and employment, which can be explained by the accelerate deterioration of primary balance deficit and the Central Bank’s low interest rate. Moreover, even though the initial positive response of investment to a government spending shock is positive, this is ephemeral and nonsignificant. Our findings highlight that, in order to reach growth on the long-run in times of crisis, the Romanian economy should adopt the fiscal policy and measures suggested by the Supply-side Economics.

The Market Economy in Transition and the Accuracy of the Economic Results: Is the Economic Growth of Romania in the Last Years a Real One?

The way the results of the human activity are measured has been and still is a major theoretical and practical concern of the economic world. In this article we are particularly interested in analyzing the circumstances that provide a real image for the economic results at macroeconomic level. We keep as our main interest the technology of value making process in market economy and the relationship between real and nominal economy in this process. We apply the theoretical aspects on Romania in order to analyze the way macroeconomic indicators are reflected in the population living standards. The way the results of the human activity are measured has been and still is a major theoretical and practical concern of the economic world. Reasons of statistic evidence or comparative analysis, or simply the human curiosity to find out how the human effort is rated in certain fields or historic periods fully explain such concerns.We know today, retrospectively judging things, the methodology that has been at the foundation of the rating of created values has defined the aspect and philosophy of two great schools: the classic and neo-classic school. They have essentially marked the evolution of economic thought. The first school has operated with the absolute value criterion; the second one, with the relative value criterion. Having in common the fact that both schools agree that work is the main source of value, interference areas disappear when it comes to the issue of the technology of value.