Fiscal Deficits, Monetary Reform, and Inflation Stabilization in Romania
World Bank, Development Research Group, Macroeconomics and Growth, 2000 - Banks and Banking Reform - 33 pages
Fiscal problems are a key factor behind the inflation that has persisted in Eastern Europe since 1989. Deficits need to be cut back, but by how much for a given inflation target? A simple framework links debt, the deficit, and inflation to assess the fiscal stance of the Romanian economy.
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ADEPs Anand assessing fiscal sustainability calculating Central Bank commercial banks currency in circulation currency substitution debt accumulation debt dynamics debt to GDP delayed fiscal adjustment demand deposits domestic currency domestic debt domestic financing equation exchange rate changes exchange rate depreciation February 2000 February financeable deficit financial asset demands fiscal inconsistency fiscal policy foreign assets foreign currency deposits foreign debt foreign financing foreign liabilities framework GDP ratio government budget deficit government deficit impact of real increase inflation tax January 2000 January long-run loss account monetary base money financing nominal exchange rate nominal interest rate percent of GDP profit and loss public sector deficit public sector liabilities rate on savings real exchange rate real GDP growth real growth rate real interest rate real public sector required deficit reduction reserve requirements Romania Romanian economy savings deposits seigniorage revenue Table tax revenues total public sector transition economies Wald test Wijnbergen 1997