OPTIMAL FISCAL SYSTEM AND PUBLIC FINANCE SUSTAINABILITY INDICATORS IN EAST EUROPEAN COUNTRIES WITHIN THE EU27

BANU Ilie, "Lucian Blaga" University of Sibiu

BUTIUC Ioana-Madalina, Lucian Blaga University of Sibiu

Abstract:
The aim of the paper is to outline the characteristics that an optimal fiscal system has to fulfill. Starting from the hypothesis that high-debt EU countries may be suffering from higher tax induced distortions to their economy whereas the lower-debt counterparts will not, we expect taxes to influence public deficit rate and study its influence on the level of public debt ratio and determine the regression equations. Further, we discovered using SAS software that the influence is stronger on individual countries studied than on European level. Findings are a signal to be considered by policymakers when setting the automatic stabilizers.

Keywords: optimal fiscal system, public debt, public deficit, tax-to-GDP ratio

JEL Classification: C32, C53, E63

Volume: 63.4-5, Issue: 4-5

Pages: 121 - 136

Publication date: , 2012

Download the article: http://economice.ulbsibiu.ro/revista.economica/archive/RE%204-5-63-2012.pdf

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