INDEX OF THE CYCLE OF MONEY - THE CASE OF MOLDOVA

Volume 8 / Issue 1/ June 2022 DOI: 10.53486/2537-6179.8-1.06 INDEX OF THE CYCLE OF MONEY - THE CASE OF MOLDOVA Constantinos CHALLOUMIS *1 Abstract: This paper assesses the cycle of money in an actual case scenario like this of the economic system of Moldova. The calculations of the index of the cycle of money in Moldova are compared with the global average index of the cycle of money. The results reveal that Moldova is below the average global value, but it is above the critical level of 0.2, meaning that the economy can face an economic crisis. Therefore, Moldova’s results show that it is a well-structured economy and can face an economic crisis. These results are from a project for multiple countries and this is the only study until the present time about this country’s index of the cycle of money. The period that is used for compiles is the global recession period of 2012 - 2020. Prior results are from the cases of Latvia, Bulgaria, Serbia, Greece, Montenegro, Ukraine, and Thailand. The current work is the only one for the case of Moldova. Keywords: Index of the cycle of money, general index of cycle of money, Moldova, Cycle of Money (CM) theory, structure of the economy JEL Code: D6, E1,H1 Introduction This paper scrutinizes the dynamic of the economy, of Moldova, using the theory of the cycle of money. The theoretical characteristics of the cycle of money support that the dynamic of an economy is formed on the idea of the number of times that money is used in an economy. An amount of money in many cases gets out from an economy to external banks or other economies. The main idea is that the larger companies and the international companies in most cases save their money on external banks and economic heavens. The decision of the G7 for the global implication of the tax rate of 15% follows the concept of the theory of the cycle of money. Thus, the tax authorities should put an additional tax on these kinds of enterprises to reduce the losses to the economy. The smaller companies and the freelancers should be taxed with lower tax rates. It would be plausible to increase the dynamic of the economy. Thus, the factories, the know-how services of large companies, the health care system, and the educational system comprise a special case for the economy, as they belong to those cases where the taxes improve the quality of the economy. The factories and the large know-how companies increase the cycle of money, as they do not substitute the activities of the small-medium companies and the freelancers. The educational and health care systems improve the quality of the economy, making the whole economy better (are an exemption) (Evans, Ringel, & Stech, 1999; Grove, Sanders, Salway, Goyder, & Hampshaw, 2020; Johnston & Ballard, 2016; Miailhe, 2017; Montenegro Martínez, Carmona Montoya, & Franco Giraldo, 2020; Persson & Tinghög, 2020; Rasmussen & Callan, 2016). *1 Constantinos Challoumis, phd cand. in economics, National and Kapodistrian University of Athens (N.K.U.A.), Athens, Greece. Email: , ORCID: 0000-0002-7436-0506 Received: 16.11.2022 | Accepted: 01.06.2022 | Pages: 77-89 | https://csei.ase.md/journal/ 77 Volume 8 / Issue 1/ June 2022 DOI: 10.53486/2537-6179.8-1.06 Larger companies should not provide similar products and services, like that to smaller companies, as they can make investments in economic fields that smaller companies cannot support. In that way, an economic system achieves its best level. Moreover, the concept of the cycle of money shows that with the appropriate allocation of production units and taxes the money is cycled inside the economy achieving the maximum dynamic of the economy. This paper is about Moldova’s s index of the cycle of money (Burstein, 2020; Franko, Tolbert, & Witko, 2013; Hagenaars, Jeurissen, & Klazinga, 2017; Rashid, Warsame, & Khan, 2020; Saraiva et al., 2020; Schram, 2018). The research is based on an actual case scenario of a country’s economic system. Therefore, the principal hypothesis of this paper aims to estimate the index of the cycle of money in Moldova and to answer the question if it’s near the worldwide general index of the cycle of money, according to the simple index or the general index of the cycle of money. The cycle of money in Moldova should be similar to or close to the worldwide general index of the cycle of money to be able to counteract a potential depression. The applied approach is formed totally on mathematical estimations from the relevant theory. The results establish that Moldova’s economic system is properly established, as it follows the general international index of the cycle of money (the value of 0.5) which represents the average global case (Challoumis, 2018a). The countries near 0.5 and above it have an appropriate distribution of money to their financial system. Moldova’s economic system is considered as well established, standing on the results of this paper. The question about the way the index of the cycle of money works in the case of Moldova is answered from the structure of its economy and the way that the money is distributed to its economy. But, it needs some improvements to have an even better index cycle of money (Challoumis, 2018c, 2018a, 2018b, 2019b, 2019a, 2020b, 2020a). Therefore, Moldova should decrease taxes for small and medium enterprises, to achieve better reuse of money in the country’s economic system and simultaneously increase them of the larger enterprises (OECD, 2020a, 2020b). The formulation of two hypotheses has been made, one related to the level and another to the impact of the index level on the policy decisions and/or the economic evolution. 1. Litterature review This work presents empirical results about the form and content of controlled transactions in the global economy, and the impact they have on the economies of individual countries. Especially in this case is examined the economy of Moldova. - Controlled transactions include transfer pricing, triangular transactions, and in general any form of control aimed at achieving profits. - In the cases of health and education, any expenditure contributes to the achievement of qualitative characteristics of an economy and substantially upgrade it, i.e. returns to the economy in a multiplier way. - This theory predicted the need for a minimum fixed tax on international transactions, some years before its imposition by the G20 decision. Received: 16.11.2022 | Accepted: 01.06.2022 | Pages: 77-89 | https://csei.ase.md/journal/ 78 Volume 8 / Issue 1/ June 2022 DOI: 10.53486/2537-6179.8-1.06 - The theory detects the resilience of an economy, depending on the use of money, structural deficiencies are with the functionality of an economy, since depending on the "dispersion" and the "reuse" of the money cycle, the state of an economy is detected. - It is indicated the percentage and the amount of need to be strengthened. - The 'structural' characteristics of an economy can be identified on the basis of its 'fun (...truncated)