Fiscal Policy Role and Development in Bulgaria and Eu

Topics: European Union, Public finance, Macroeconomics Pages: 23 (7960 words) Published: November 20, 2010
International Finances

R e p o r t
Fiscal policy role and development in Bulgaria and in the EU

Fiscal policy is a set of measures by the government aimed to slow or stimulate the economy. Such measures are changes in tax policy and government spending. With the changes that are made the government influence directly to the demand.

Fiscal policy is based on the theories of the British economist John Maynard Keynes. The idea is that the state can influence the economy by increasing or reducing the taxes and public spending. This influence is limiting the inflation (taken for healthy for levels of 2-3%), increased employment and maintain the value of money.

The main instruments of fiscal policy are:
• Changes in volume and structure of state / governmental / costs; • Changes in the system of taxes and tax rates;
Conducting the contemporary fiscal policy is aimed to amend the jointly cost, respectively. Aggregate demand, which has an impact on the formation of: • the equilibrium level of aggregate manufacture;

• the level of employment / unemployment /;
• the level of prices / inflation /.
By thus the fiscal policy is mainly connected with so called economy of demand or Keynesian theoretical conception, according to which aggregate demand has a decisive importance at formation of the key macroeconomic relationships / aggregate demand creates its necessary aggregate supply /.

Fiscal policy is government macroeconomic policy conducted by the government through purposive changes in government spending and taxes - in this context it is restrictive fiscal policy. Fiscal policy is a set of economic approaches / principles /, economic activities and economic instruments which have an influence on the formation of aggregate demand with aim to target the aggregate production and employment to the potential level in a stable price level.

By the point of general theoretical principles for the formation and conduct of fiscal policy, it is formed as an economic stabilization policy. Fiscal stabilization policy is aimed to use of fiscal instruments to support the aggregate / national / manufacture to its potential level - at full employment and constant price level.

Conducting fiscal policy of the Government, aims to provide adequate impact on aggregate demand of goods, as and on total production - the degree of usage the resources (unemployment) and on the level of prices (inflation). This policy is tightly linked to the state budget.

Governmental spending are one of the mainly and most important instruments of fiscal policy. Through all the different forms of government spending takes place redistribution of the national product in accordance with the objectives and tasks of state fiscal policy. Social needs are standing at the heart of government expenditure, ie the need to redistribute a significant proportion of GDP on public expenditure policy. Consequently, government spending can be defined as part of GDP, which is used by the State to meet public needs, to finance the production and consumption of public goods and services.

Continue and end the distribution performed by the revenue financial forms through government spending. Government spending reflect the process of consumption of collected in the state budget financial resources. From this point of view, government spending are category primarily of financial redistribution. Collected by them in centralized monetary funds received strict earmarking - investment, culture, business management, etc.

Therefore, the characterization of government expenditure includes the following points: a) they are part of GDP, which is distributed by the state according to state fiscal policy; b) their main purpose is the provision of public goods and satisfying public needs (defense, security, etc.); c) they are a core fiscal instrument to influence the country on different sides of the activities of society, especially on economic growth,...
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