An Overhaul of a Doctrine: Has Inflation Targeting Opened a New Era in Developing-country Peggers?

The aim of this paper is to empirically examine the effect of a regime switch, from exchange-rate targeting (fixed exchange rate) to inflation targeting, on monetary policy in developing economies, hence adding to evidence on whether inflation targeting along with a managed float provides a better monetary policy compared to exchange-rate targeting. For this purpose, a group of developing countries that have historically experienced such a switch is analysed. This is done by an augmented interest-rate rule a-la Taylor (1993; 2001). Two methodological approaches are used: switching regression and Markov-switching method. Although both approaches have different drawbacks which compensate, still both lead to the conclusion that inflation targeting represented a real switch in developing countries. The period of inflation targeting was characterized by: a more stable economic environment; by more independent monetary-policy conduct; and by strict focus on inflation. Estimates suggest that the switch to a new monetary regime explains these results.inflation targeting, exchange-rate targeting, monetary regime switch, developing economies

Unregistered Micro-Performers of Business Activity: The “Who” and “Why” in North Macedonia

The purpose of this paper is to understand who the unregistered micro-performers of business activity (MPBA) in North Macedonia are and why they decided to stay informal. We rely on a specifically designed Survey on Unregistered Micro- Enterprises collected from 151 unregistered MPBAs in May 2022. Results reveal that most common forms of unregistered MPBAs include: street sellers, individual farmers, handicraftsmen, providers of personal beauty services, painters, plasterers, bakers, lessons instructors, motor vehicle mechanics and housekeepers and cleaners. Costs of becoming a registered company, particularly taxes, social contributions, parafiscal charges and the cost for accounting, have been identified as an important impediment to registration. On the other hand, access to bigger customers, to more reliable sellers of inputs and to new markets have been identified as large benefits of formalization. The second motivation is the access to social protection and pension in the old age. Costs of staying informal have limited power in motivating registration

OUTPUT VOLATILITY IN MACEDONIA: A ROLE FOR THE EXCHANGE RATE?

The study aims to empirically explore the relationship between exchange-rate rigidity and output volatility for Macedonia, building on the flaws of the existing, though scarce literature on the topic. Specifically, it carefully constructs the output volatility regression; considers the measure of output volatility; and accounts for the endogeneity bias doubted to be present in the respective literature. Moreover, it utilizes a Hodrick-Prescott definition of volatility, to avoid persistent series which are obtained by using rolling standard deviations. The empirical investigation covers the period 1998:Q1 - 2009:Q2 and uses a GMM estimator. We find that, in general, a TOT shock opts to increase output volatility, but under a more flexible regime, it starts to affect the output fluctuations negatively, implying a role of a buffer. Quite the contrary, when nominal shocks (monetary and/or fiscal) hit the economy, a more rigid alternative of the exchange rate is preferable.exchange-rate regime, output volatility

Does Cultural Heritage Affect Job Satisfaction: The Divide between EU and Eastern Economies

The objective of this paper is to examine the factors influencing worker’s job satisfaction aside the conventional factors (personal background, individual labour market characteristics, organisational culture, and so on) and introduce the basic cultural values and beliefs, and then to put this into a comparative perspective for the South-East European (SEE) countries and for Macedonia, in particular. Cultural values have been grouped into traditional vs. secular-rational values and survival vs. self-expression values. The main result from the study is that cultural heritage exerts considerable effect on job satisfaction in SEE with some determinants – like the importance of work, religion and family – exerting stronger influence in SEE than in CEE and in Western Europe. The impact of cultural values on job satisfaction in Macedonia has been found to be only limited. Mainly the traditional cultural values have been found important, while only trust from the ‘survival’ group likely affects job satisfaction and likely with the effect being stronger than in the case of SEE, CEE and Western Europe

ENTRY OF BANK FOREIGN CAPITAL IN DEVELOPING ECONOMIES: MEASURING PROFIT & COST EFFICIENCY

The paper aims at acknowledging the efficiency effects of bank privatization upon the entry of strategic foreign investor. Thus, a broad experience from the developing countries is reviewed. General conclusion is that the foreign capital infusion improves the profit and cost efficiency of the banks. The paper also investigates the various methodologies that academics employ when they investigate the topic.Privatization, Foreign capital, Cost and profit efficiency, Measurement

The covid-19 impact on exports in North Macedonia— firm-level analysis

Exports experienced extraordinary growth rates during the last decade in North Macedonia capturing above 50% share of the country’s GDP. However, the COVID-19 crisis interrupted the positive export series imposing various constraints in multiple dimensions on export-oriented firms. This study explores the multidimensionality of the COVID-19 impact on exporters in North Macedonia. We find that COVID-19 caused a systematic slowdown in the exporters’ revenue, profit, investment, capital, employment and salaries growth rates. Moreover, the limited access to finance, import exposure to EU markets, high labourintensity, export exposure to non-EU markets and lower competitiveness make exporters less resilient to the pandemic shocks representing the main obstacles exporters are/will be facing in the recovery stage

Does motherhood explain lower wages for women in Macedonia?

The objective of the paper is to estimate the motherhood wage gap and its contribution to the gender wage gap in Macedonia, after considering workers’ characteristics and selectivity bias into the labour market for the childbearing-age population. In particular, it aims to disentangle the extent to which the natural role of women to have and raise children affects the gender wage gap. Due to the large female inactivity in Macedonia, we employ a repeated imputation technique, which imputes the wages of those who are unemployed or inactive. Imputed samples are used to decompose the gaps by weighing and by using a re-centred influence function. The Survey of Income and Living Conditions (2010) is used in the analysis. The results suggest that the motherhood wage gap in Macedonia is fully explained by characteristics and, hence, it does not contribute to the potential reducing of the gender wage gap. The selection is also irrelevant, i.e., its consideration does not alter these conclusions

Size, competitiveness and FDIs : small or transition country curse?

The objective of the paper is to assess the relationship between a set of competitiveness indicators and foreign direct investment (FDI) inflows with reference to the size and transition-economy status of a heterogeneous set of 60 countries. Results suggest that an increase of competitiveness is robustly, statistically and sizably related to an increase of FDI inflows. Goods market efficiency, market size and business sophistication were identified to have been particularly important for FDIs. However, the positive relationship between competitiveness and FDI is weakened or wiped out in a small country, suggesting that, because of their size, small countries need to undertake extra efforts in converting their improvements in competitiveness to work in favour of FDI attraction. On the other hand, we do not find robust evidence that transition economies are disadvantaged in improving their competitiveness to attract FDIs. Given that many transition economies are small, we suggest that it has been rather the size of the country and not the fact that it has gone through a transition process, which may have affected how its competitiveness works for attracting FDI.peer-reviewe

Dissatisfied, feeling unequal and inclined to emigrate: Perceptions from Macedonia in a MIMIC model

Macedonia has a large diaspora, high emigration rate and large amount of remittances received. The objective of this paper is to describe the current inclination to emigrate from Macedonia, in the light of the dissatisfaction with the domestic political and economic environment and the potential feeling of gender and ethnic inequalities. Particular reference is made to the role of remittances. The Remittances Survey 2008 is used, while dissatisfaction, feeling unequal and inclination to emigrate are treated as latent continuous variables in a MIMIC (Multiple-Indicator Multiple-Cause) model, observed only imperfectly in terms of respondents’ perceptions and opinions. Results robustly suggest that dissatisfaction with the societal conditions in Macedonia grows in the twenties and early thirties of people’s life and is more prevalent among ethnic Albanians. Albanians also demonstrate stronger feeling of gender and ethnic inequality. Dissatisfaction, but not the feeling on inequality, then feeds inclination to emigrate. Further to this, however, males and less educated persons are more inclined to emigrate, irrespective of their level of dissatisfaction. Remittances were found to play a strong role for the inclination to emigrate: inclination is larger in households receiving remittances and increases with the amount received, as it is likely that remittances alleviate financial constraints for other persons of the household to emigrate

MINIMALNA PLAĆA I UDIO RADA U PROIZVODNJI: DOKAZI IZ SJEVERNE MAKEDONIJE

The objective of the paper is to understand whether the minimum wage plays a role in the labor share in the manufacturing sector in North Macedonia. We decompose the movements of the labor share into those along a share-capital curve, shifts of this locus, and deviations from it. We use the capital-output ratio, total factor productivity and input prices to capture these factors, while the minimum wage is introduced as an element that shifts the curve. We estimate a panel of 20 manufacturing branches over the period 2012-2019 with FE, IV and system-GMM estimators. We find that the role of the minimum wage for the labor share is industry-specific. In labor-intensive and low-paid industries, it increases workers’ labor share, which corresponds to a complementarity between capital and labor. For capital-intensive branches, it reduces labor share, likely through the job loss channel and along a substitutability between labor and capital. This applies to both branches where foreign investment and heavy industry are integrated.Cilj je članka analizirati ima li minimalna plaća ulogu u udjelu rada u proizvodnom sektoru u Sjevernoj Makedoniji. Kretanja udjela rada rastavljamo na ona duž krivulje dioničkog kapitala, pomake te krivulje i odstupanja od nje. Koristimo se omjerom kapitalnog koeficijenta, ukupnom faktorskom produktivnošću i cijenama ulaznih parametara kako bismo obuhvatili te faktore, dok je minimalna plaća uvedena kao element koji pomiče krivulju. Procjenjujemo popis 20 proizvodnih industrija u razdoblju 2012. – 2019. koristeći se FE, IV i sistemskim GMM procjeniteljima. Smatramo da je uloga minimalne plaće u udjelu rada specifična za industriju. U radno intenzivnim i slabo plaćenim djelatnostima povećava se udio rada zaposlenih, što odgovara komplementarnosti između kapitala i rada. U kapitalno intenzivnim industrijama smanjuje se udio rada, vjerojatno na temelju gubitka radnih mjesta i uz zamjenjivost rada i kapitala. To se odnosi na oba sektora u kojima su integrirana strana ulaganja i teška industrija