Irina Bilan

The Euro Area Sovereign Debt Crisis and the Role of ECB's Monetary Policy☆

Abstract Against the background of the economic and financial crisis, public finances severely deteriorated in many EMU Member States and a new crisis, of sovereign debt, emerged. Considering ECBs recognized responsibility for ensuring overall financial stability, our paper shortly overviews the main monetary policy measures it adopted since May 2010, proving the vital roleof ECBs interventionin countering the effects of the sovereigndebt crisis. The added value of our work mainly results from the coherent analysis of the interconnections between sovereign crisis, banking crisis and the real sector of the economy, as determinants for ECBs intervention, as well as from highlighting the potential risks entailed by ECBs actions over the medium and long term.

Interconnections between Public Indebtedness and Inflation in Contemporary Economies

This paper aims to analyze the specific interconnections established between public indebtedness and inflation, both from the perspective of considering inflation as a result of public borrowing and of voluntarily promoting inflation to reduce the (real) value of public debt and to ease its burden. It identifies the channels through which these effects are occurring, it determines the conditions of their manifestation and evaluates their relevance for different (developed and developing) contemporary economies. Although promoting irrational public borrowing may lead to inflation, such a correlation proved to be quite difficult to identify in the practice, especially for currently developed economies.

What Drives the Creation of New Businesses? A Panel-Data Analysis for EU Countries

ABSTRACT Our article aims to identify the key factors that affect the establishment of new businesses in 18 developed and emerging member countries in the European Union over the period 2003–2015. Using panel-data estimation techniques, we alternatively assess the effects of some macroeconomic, demographic, individual, and business environment-related factors on the dynamics of new firm creation, proxied by the rates of nascent entrepreneurship and entrepreneurial intentions. The results show that macroeconomic and demographic variables are the most significant determinants, followed by the individual characteristics of potential entrepreneurs and of the business environment. In addition, the sovereign debt crisis in Europe in 2010 positively affected entrepreneurship through increased support for new firms by individual country governments and the European Union.

An Evaluation of the Economic and Financial Crisis's Impact on Local Budgetary Aggregates: The Romanian Case☆

Abstract Under circumstances of economic and financial crisis, a deterioration in the budgetary position of both central and local governments occurs, although the latter are assigned, to a greater extent, with revenues from taxes with a stable taxable base (such as property taxes). At the same time, measures designed to counter the effects of the crisis should be promoted by both the central government, which traditionally performs the task of macro stabilization, and the local governments which, considering the responsibilities assigned to them and the local dimensions of the crisis, should supplement central governments efforts and support for the occurrence of the expected positive effects. In order to outline some possible courses of action, it is, however, necessary to perform a careful analysis of the effects of the crisis on local governments’ revenues and expenditures. This is only rarely assumed in the literature (especially for the case of Romania), often concerned with the issue of the central budget. On these grounds, this paper aims to provide, based on the analysis of data coming from Eurostat, the Romanian Ministry of Public Finance, the Romanian National Institute of Statistics and the Fiscal Council, a detailed assessment of the effects of the crisis on the revenues, expenditures, budget balance and debt of Romanian local governments, highlighting their peculiarities in relation to the effects recorded by the theory or by other Central and Eastern European countries. The paper also aims, by analyzing the changes recorded in the structure of Romanian local budget revenues and expenditures, to assess the rationality of the measures adopted at local level during the crisis, as well as their compatibility with the objectives of economic stabilization and long-term economic growth, suggesting, when appropriate, some alternative viable solutions.