Impact of public funding of education on economic growth in Macedonia

The main aim of this study is to investigate the relationship between public spending on education after the process of decentralization and economic growth in Macedonia as low income state. This paper do not have intention to make a picture of education system in Macedonia, how it functions or if education is open to all, but has the aim to measure the public spending on education as a determinant that has impact on economic growth even positive or negative. This paper raise the following important question: 'do all measures of public spending on education promote economic growth?' As a lack of data in developing countries like is Macedonia the specification of empirical models to test the causal effect on public spending on education and growth is paradox and this explain why the road through which public education expenditure affects economic growth is not yet well understood. The inter-relationships between government expenditure and education quality should be taken into account when formulating education policy to promote economic growth (Corray, 2000). The channels by which education can promote growth maybe do not lie to quantity of public spending but on quality of the policy that means where youth end after their education. We investigate the link between public spending on education and economic growth in Macedonia using Logarithmic Multiple Regression Model. We came in conclusion that the model is significant. The result shows negative effect on public spending on education and economic growth in the case of Macedonia. The results also raise another statement 'what exactly are the highly educated workers doing together (that is so sensitive to their being highly educated) if it does not involve things changing at the margin?' (Aghion, et.al 2009). It ends with some key conclusions and recommendations that there has to be founded another channels to produce quality education - skilled labor by which will rise the productivity and economic growth

Empirical Approach of the Nexus between Public Expenditures and Economic Growth: Case of Republic of Kosovo

The main objective of this paper is to investigate the impact of public expenditures on economic growth in the case of Republic of Kosovo, by addressing its significant nexus for the last decade and such results for further recommendation for future fiscal policies. Further, the paper analysis whether public expenditures have positive impact on economic growth in Republic of Kosovo, by investigating the impact of the types of public expenditures on growth. In addition, for determining the stationarity of the time series 2006m1 – 2016m9, Augmented Dickey Fuller test was employed, while VAR model was used to determine the long-run relationship between types of public expenditures and economic growth in Kosovo. The results of the empirical analysis reveal that the data are stationary in their level, while VAR results suggest positive and significant effects of transfers on real GDP, based on the positive coefficient and significance value p = 0.009, while negative and significant effects from municipal expenditures, based on the value of p = 0.066 in this model. Further, expenditures on wages, capital and subsidies have a positive but no significant effect on growth, while expenditures for goods have negative but no significant effect on economic growth in the case of the Republic of Kosovo. Finally, the paper can present a contribution on the existing literature regarding the nexus between public expenditures and economic growth, and for improvement of efficiency utilization of public expenditures in regarding their productivity. Key words: growth, fiscal policy, unit root, VAR

Threshold effect of public debt on economic growth: An empirical analysis in the European transition countries

U radu se empirijski ispituje i procjenjuje odnos između javnog duga i gospodarskog rasta u europskim tranzicijskim zemljama od 1995. do 2017. (uključujući obje godine). Cilj ovog istraživanja je identificirati i odrediti granične vrijednosti ili opseg u kojem udio javnog duga u BDP-u ima pozitivan učinak na gospodarski rast, a nakon kojeg udio duga u BDP-u negativno utječe na gospodarski rast u tranzicijskim zemljama Europe. U tu svrhu primjenjujemo različite ekonometrijske modele i tehnike kao što su objedinjeni OLS (metoda najmanjih kvadrata), modeli fiksnih i slučajnih učinaka, GMM (generalizirana metoda momenata) i bootstrap metoda kako bismo odredili granične vrijednosti udjela javnog duga u BDP-u. Nalazi dokazuju opću teoretsku pretpostavku da na niskoj razini udio javnog duga u BDP-u pozitivno utječe na gospodarski rast, dok nakon određene prekretnice prevladava negativan učinak na rast u tranzicijskim zemljama Europe. Uz to, rezultati pokazuju različite razine graničnih vrijednosti udjela javnog duga u BDP-u među europskim tranzicijskim zemljama. Do sada je potvrđeno da su granične vrijednosti duga prema BDP-u za manje razvijene tranzicijske zemlje niže u odnosu na razvijenije zemlje Europe. Stoga rezultati pružaju dodatne informacije europskim tranzicijskim zemljama, čija je razina duga iznad praga vrijednosti, kako bi smanjile svoj javni dug i poduprle dugoročne izglede gospodarskog rasta.The paper empirically examines and assess the relationship between public debt and economic growth in the European transition countries from 1995 to 2017 (both years inclusive). The study attempts to identify and determine the threshold values or the extent to which public debt-to-GDP ratio has a positive effect on economic growth, and beyond which point debt-to-GDP ratio has a negative effect on the economic growth in European transition countries. For this purpose, we employ different econometric models and techniques such as pooled OLS, fixed and random effects models, GMM (Generalized Method of Moments), and bootstrap method in order to determine threshold values of public debt-to-GDP ratio. The findings prove the general theoretical assumption that at low level of public debt- to-GDP ratio has a positive effect on economic growth, whereas beyond a certain turning point a negative effect on growth prevails in the European transition countries. In addition, the results show different levels of threshold values of public debt-to-GDP ratio among European transition countries. So far, it is confirmed that for less developed European transition countries the threshold values of the debt-to-GDP is lower than for more developed ones in the sample. Therefore, the findings provide additional information for European transition countries, which have debt levels above the threshold values, as to reduce their public debt and to support long-term economic growth prospects

Sustainability of the Pension System in the Republic of Macedonia: Challenges and Solutions

The aim of the study is to create a forecasting model that will foresee the trend of the situation of the Pension, Insurance and Disability Fund of the Republic ofMacedonia. The methodology applied to evaluate the sustainability of pension system, and controlling the risk to pension funds, is forecast of all individual regressors through first order autoregressive model. This method will enable the assessment of the future uncertainty of the contributions and expenditures of pension insurance. The forecasted data show that in 2056, if no other reforms are undertaken, the increase in the percentage points of the number of employers is less than the increase in the number of pensioners for 3.9 percentage points. As per the natality and mortality, in the Republic of Macedonia natality will be only one third of its statistics in 2016, whereas mortality will double its value by 2056