Following the financial crisis of 2007 and the sovereign debt crisis in 2010 that affected the soundness and reduced the strength of public finance in European countries, there has been a growing interest in developing methodologies to the help assess and signal the vulnerability of fiscal policy. Therefore, the aim of this study is to develop a new framework (V-L-D) to assess fiscal vulnerability. V-L-D represents a new methodology on the measurement of fiscal vulnerability that relies on the assumption that vulnerability can occur even during calm times. In comparison with previous methodologies that studied fiscal vulnerability around crisis and fiscal distress times, our framework investigates fiscal vulnerability near fiscal adjustments episodes. Our methodology relies on two distinct indicators: one showing the vulnerabilities indicated by the level of the cyclically adjusted budget balance and distance-to-stability, and one showing the vulnerabilities pointed out through the changes of the cyclically adjusted budget balance and public debt. V-L-D is able to classify fiscal vulnerability into five distinct categories having scores from 0 (no fiscal vulnerability) to 4 (extreme fiscal vulnerability). Using annual data ranging over 1990–2013 for 28 European Union countries, we evidenced 310 episodes of fiscal vulnerability, out of which 128 episodes of low vulnerability, 94 of moderate, 62 of strong, and 26 of extreme fiscal vulnerability. We also found that over 2004–2013, Greece, Portugal, Romania, United Kingdom, Ireland, Spain, and Slovenia were the most fiscally vulnerable countries in the Union. United Kingdom and Greece went through the longest episodes of fiscal vulnerability, counting 12 and 11 consecutive years, respectively. We tested our framework’s effectiveness against the Excessive Deficit Procedure. We found that the overall performance is good: V-L-D assessed moderate fiscal vulnerability during the procedure, strong fiscal vulnerability in the first year when procedure was initiated, and extreme vulnerability one year before the initiation.

The most part of the financial literature agree that the information contained in different financial variables is related somehow to the stock market indexes. Some theories state that the stock market index predicts the future performance of the economy, whereas others sustain that it is linked to the release of new information or it has a lagged reaction to it. This paper investigates the relation between a Romanian stock market index and some (especially macroeconomic) variables in the period between February 2002 to December 2013, considering for possible contemporaneous, lagged and anticipated relations. The results suggest that the variation of the index is mostly associated with the synchronous levels of the indicators. Moreover, stock market index return is better explained by the future levels than the ones for the past levels of indicators.

This article aims to identify the applied strategies for discretionary fiscal changes-fiscal adjustments and fiscal expansions-for the period 1990-2011 in ex-communist European Union countries. Using data for fiscal adjustments (improvement of the budget balance) and for fiscal expansions (deterioration of the budget balance), there are analysed the strategies that led to this change in fiscal policy indicators and their impact on the economic activity. The database contains 1990-2011 period and consists in macroeconomic indicators which reflect the fiscal policy (public revenues, public expenditures, public budget balance, general government consolidated gross debt), economic growth (GDP per capita, output gap) and fiscal adjustment process (size, proportion obtained by decreasing expenditure to GDP, proportion obtained by rising revenues to GDP, and dummy variables for need, success, gradual, expenditure based). In order to identify the characteristics of the fiscal policy adjustments and their effects on the economic growth, we apply cluster analysis, graphic analysis, statistical indicators, and logit models. The obtained results of these methods are useful for evaluating the strategies used for diminishing / extending the deficit and to identify the determinant factors for the adjustment's success.

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