Romania’s Economy: Six Lessons from the Recent Business Cycle
Lesson No.1: Responding to financial crises with overregulation is impairing economic growth
Lesson No.2: „SECONDARITY”: Countries understand that excess investment might be dangerous and tend to move towards excess savings
Lesson No.3: Business cycle is much more complex than we thought. It has a „normal” phase and an „abnormal” phase
Lesson No. 4: Absent unsustainable stimuli, economic growth in Romania remains low. Structural policies to stimulate productivity is the only way ahead
Lesson No.5: In real time, we systematicallyoverestimate potential output and the naturaleinterest rate. Hence, we systematically underestimate GDP gaps during boom periods and systematically overestimate GDP gaps during recession periods
Lesson No. 6: Despite progress in economic growth and economic freedom, the Romanian economy is suffering from unclear property rights and low property freedom
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