RoMod: A Dynamic CGE Model for Romania: a Tool for Policy Analysis

Romania's economic transition process went parallel with efforts aimed at obtaining the EU acquis for Romania's forthcoming EU membership in January 2007. It implies major institutional and economic changes that need to be considered with great care. The issues raised by the EU membership require a modern and powerful quantitative analytical tool. These issues can only be addressed in a consistent economy-wide framework given that the transition process produces innumerable, dynamic and complex interactions between economic agents and sectors. The general equilibrium model developed in this study, called RoMod, provides the tools necessary to answer several important questions raised by the EU membership. RoMod provides a consistent framework that can assist the Romanian policymakers in evaluating a wide range of fiscal-budgetary measures and contributes to the discussion on the socio-economic costs of regulatory adjustments in the field of taxation and the restructuring of public expenditures by providing an empirical, general equilibrium assessment, of several pre-accession policy scenarios. It also offers an analysis of the structural relationships among different economic agents, to improve the understanding of the Romanian economy.