Fiscal Policy Role and Development in Bulgaria and Eu

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†¦show more content†¦This is related with the formation of recessionary gap in total production and presence of unemployment. It has a expanding effect on the economy and suggest increasing of governmental spendings. As a result from this, the total costs are also raising and pushing the total production to the equal potential Depending on the actual condition of the economy is conducted expansionary or restrictive fiscal policy. Therefore expansionary fiscal policy is stimulating and targets increased of production and reducing the unemployment. For this purpose is launched: 1 - Increase in government spending Y = C + I + G + (Ex - Im) 2 - Reducing taxes Restrictive fiscal policy is carried out when the economy is expanding, ie employment and production are increasing and there are conditions for inflation. Restrictive policy aims to reduce the growth of production and inflation. As part of restrictive fiscal policy is undertaken: - Reduce government spending - Increase taxes As a result of the restrict fiscal policies are creating conditions for a financial surplus. The state budget is centralized fund with financial outputs and inputs. Budget revenues are formed from tax and non-tax revenues. 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