TAXES AND ECONOMIC GROWTH IN ROMANIA.
                              A VAR APPROACH

                         Mihai Ioan Mutaşcu, West University of Timişoara
                Dan Constantin Dănuleţiu, “1 Decembrie 1918” University of Alba Iulia


ABSTRACT: The paper analyzes the relationship between taxes and economic growth in the case of
Romania in the period January 1999 - March 2010, using an unrestricted Vector Autoregression
Model (VAR) based on the rate of dynamic taxation’s level and the rate of dynamic economic growth.
The relationship is questioned in both directions, namely with reference to the manner in which taxes
affect economic growth, but also in terms of the influence that economic growth exerts on taxes in the
case of Romania for the mentioned period. The results show that tax policy in Romania cannot be taken
to extremes, and should be very carefully implemented because a large amount of factors can influence
the results

Keywords: tax, growth, VAR analysis, impulse functions, effects

JEL codes: E62, H21, O40