The COVID-19 pandemic has had significant impacts on Romania, exacerbating existing inequalities in the country. Economic disparities between counties were deepened, with counties with higher GDP per capita and diverse economic activities faring better than those with lower GDP per capita and narrow economic activities. The pandemic also led to a decline in population numbers, with most counties in the historical regions of Muntenia and Moldova experiencing below-average declines. In addition, the pandemic had a significant impact on the average life expectancy in Romania, highlighting the need for targeted policies and interventions to address these regional inequalities. Lastly, the pandemic negatively affected labor force participation rates in Romania, further highlighting the need for policymakers to implement measures to encourage more individuals to enter and remain in the labor market, particularly in regions with lower participation rates.

Political turbulence is known to influence the velocity of economic development and reduce investments. Our paper aims to point up the linkage between political instability and the evolution of the Romanian capital market. We model the volatility of two of the Bucharest Stock Exchange indices BET and BET-NG using a GARCH/ARCH approach for daily data between 2010 and 2021. Results highlight the interconnections between political and economic policy uncertainty and the financial market. In both cases, for BET and BET-NG, our study shows that different types of political events have different levels of influence on the indices’ volatility. Unexpected “shock” type events with negative impacts resulted in much higher volatility than positive events. When there were events that had fiscal connotations, they had a much greater power of penetration in the investment environment because it comes down to figures and calculations that had a direct, measurable impact. There is a need for political involvement, certainty, lack of ambiguity, and predictability, both from a legislative point of view and how it is applied.