In response to the energy crisis, which led to high inflation, Romania, like other EU Member States, introduced a series of price-related and income-related measures to cushion the negative impact on households’ welfare. Using EUROMOD and its Indirect Tax Tool extension, we assess the impact of these measures on welfare across the income distribution, while distinguishing between automatic stabilisers and discretionary measures. We find that these measures did not succeed in diminishing entirely the negative effect of the inflationary shock on the lowest-income population, given that, on the one hand, the shock was higher for low-income deciles, and, on the other hand, the policies applied were not sufficiently targeted. Against this background, the use of targeted measures is warranted in order to improve the welfare effect of such measures on lower-income households and diminish income inequalities resulting from the energy crisis.
Authors
AMORES Antonio F, BALABAN Georgiana, DE POLI Silvia, GAVRIL Ioana, LEVENTI Chrysa, NAE Tamara, RICCI Mattia
Related Organizations
- Pages
- 28
- Published in
- Belgium
- Rights Holder
- https://ec.europa.eu/info/legal-notice_en#copyright-notice
Table of Contents
- Contents 3
- Abstract 4
- Acknowledgements 4
- Authors 4
- Executive summary 5
- Policy Context 5
- Main Findings 5
- Related and Future JRC Work 5
- Quick Guide 5
- 1 Introduction 7
- 2 State of play and policy responses in Romania 10
- 3 Data and methodology 13
- 3.1 The microsimulation model 13
- 3.2 Scenarios 14
- 4 Results 15
- 4.1 The impact of the inflationary shock in Romania 15
- 4.2 The cushioning effect of policy measures 18
- 4.3 Automatic versus discretionary policy 20
- 5 Conclusions 23
- References 24
- List of figures 26
- List of tables 26
