Did the Crisis Change it All? Evidence from Monetary and Fiscal Policy

The recent financial and economic crisis has triggered bold and diverse policy responses to prevent further, sharper and prolonged adverse effects to the financial and the real sector. The measures for alleviating the cycle were a feature both of the advanced and the emerging and developing economies, albeit less pronounced in the latter. The bulk of extraordinary measures undertaken refers to providing monetary and fiscal stimulus, implying possible change within the monetary and the fiscal policy reaction function. Hence, in this study we estimate monetary and fiscal policy reaction function, on a sample of 61 advanced and emerging and developing countries, using panel techniques. Since the purpose is to assess the potential change in the reaction functions during the recent crisis, estimates are done for the period prior and during the crisis. More precisely, we have analyzed whether monetary and fiscal policies have been more focused on closing the output gap during the recent crisis vis-à-vis the period before the crisis. Our findings prove that the magnitude of the reaction has been much stronger during the crisis period. In addition to this key research question, the analysis investigates whether policy responses in the advanced economies have been stronger compared to the ones in developing economies. Advanced economies appear to have been much more aggressive in stabilizing output during crisis compared to their emerging and developing counterparts. Finally, the role of the constraints - the exchange rate regime, the initial conditions in context of external position (the current account balance and the level of external indebtedness), as well as the fiscal space (public debt) - is also explored. We find that the pegged exchange rate regime, the high current account and the high external indebtedness have constrained monetary authorities to respond to inflation and output during crisis, while there is mixed evidence for the constraining role of the high level of public debt to the fiscal policy reaction

Real Estate Prices in the Republic of Macedonia

In this paper we construct a hedonic house price index for Macedonia, for the period 2000-2008. Then we investigate whether house prices in Macedonia are in line with the fundamentals, finding a positive answer

Real Estate Prices in the Republic of Macedonia

In this paper we construct a hedonic house price index for Macedonia, for the period 2000-2008. Then we investigate whether house prices in Macedonia are in line with the fundamentals, finding a positive answer

Price and Income Elasticities of Export and Import and Economic Growth in the case of the Republic of Macedonia

The purpose of this empirical research is estimation of the long-term price and income trade elasticities and their practical application in Thirlwall's economic growth model in the case of the Republic of Macedonia. The estimation is based on ARDL modeling, as one of the most used procedures for testing the cointegrating relationship between variables. The results confirm the existence of long-term relationship between export and import demand and relative prices and income. There is an evidence for high import elasticity on domestic income changes and relatively significant export elasticity to changes in the world income. The estimated price elasticities are lower, with the imports being more sensitive on price variations than the exports. In other words, domestic economic agents are more sensitive to price changes than foreigners are. The higher income elasticity of import than the income elasticity of export points out the trade balance deterioration. Practical application of the estimated income elasticity of import in the Thirlwall's economic growth model shows that the growth rate of the Macedonian economy is determined largely by balance of payment constrains, or it depends on export growth rate and significantly is reduced by high income elasticity of import