IMPLICATIONS OF AGGREGATE DEMAND ON EMPLOYMENT: EVIDENCE FROM THE ROMANIAN ECONOMY

The contribution of aggregate demand to employment creation is a fact universally accepted in the specialty literature, there being the idea that between aggregate demand and employment there is a direct and bivalent relationship. In our study we aim to highlight the influence of aggregate demand and its components (final consumption, investments and net export) on employment in Romania, in the period between 1990 and 2009. The results of this research show that, in Romania, in the last two decades, between agregate demand and employment, as well as between final consumption and employment we can identify a negative relationship, fact that comes in conflict with the economic theory. Moreover, the results of our study show that in order to increase employment in Romania we need to act so as to increase investments and to adapt the domestic supply to the requirements of the domestic and international market.