Responses of Real Output in Serbia to the Financial and Global Economic Conditions
AbstractApplying and extending Taylor (1993, 1999) and Romer (2000, 2006), this paper examines output fluctuations for Serbia based on a simultaneous equation model consisting of the open-economy IS function, the monetary policy function, and uncovered interest parity. The GARCH(1,0) model is employed because the residual variance is affected by the past variance. Real GDP is positively affected by the real stock price and real government deficit and negatively influenced by expected real depreciation of the dinar, the world real interest rate, and the inflation rate. There are significant seasonal effects. Therefore, a healthy stock market, a stronger dinar, a lower world real interest rate, a lower inflation rate, and an active fiscal policy will play important roles in the recovery of the Serbian economy.
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Bibliographic InfoArticle provided by Institute for Economic Forecasting in its journal Romanian Journal for Economic Forecasting.
Volume (Year): (2010)
Issue (Month): 3 (September)
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monetary policy function; uncovered interest parity; exchange rate; world interest rate; inflation rate; government deficit;
Find related papers by JEL classification:
- O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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