MODELLING THE EFFECTS OF EU ENLARGEMENT USING THE BUDGETARY POLICY VARIABLES

The paper analyzes the budgetary policy variables and presents an econometric model for quantifying the benefits and the direct costs of European enlargement for a candidate country. By formalizing the relationship with the European Union, we identify both the potential direct benefits, measured as transferred resources from the EU to the Romanian economy (measuring the effect on the economy), as well as the direct costs, which consists of contributions toward the EU budget that a candidate country has to make. The model allows for the evaluation of the contribution that the Romanian economy can sustain without exceeding the agreed budget deficit. The model was tested using data for the Romanian economy and a forecasting scenario until 2010 was built. With the exception of the pre-electoral year, when the available resources diminish, the average level of the contribution is around 1.2% of the GDP, depending on the levelof the other budgetary expenses.