Romania’s Accession to the Economic and Monetary Union: The Role of Fiscal and Monetary Policy in Assuring Price Stability

Monica Damian

Abstract


In order that the monetary policy of the ECB to be efficient it is necessary that the monetary transmission mechanism from our country to be similar to the one from the euro area, which reveals the similarity of the financial system structure. In monetary transmission mechanism a major role is held by the structure of financial assets and liabilities of household and corporations. In this way, we have done a comparative analysis of the financial structure of households and corporations in Romania and the euro area for the period 2007-2010. The negative effects of loosing monetary policy autonomy can be taken away by promoting restrictive fiscal and income policies. But the inflation rate in Romania will be influenced not only by the national fiscal policy, but also by the fiscal policy of the countries from the euro area. Therefore, we have analysed the spillover effects of the fiscal policy.


Full Text: PDF DOI: 10.5539/ibr.v5n8p17

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International Business Research  ISSN 1913-9004 (Print), ISSN 1913-9012 (Online)

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