Transition and growth: What was taught and what happened

The paper demonstrates why the transition process is taking more time than predicted and why many countries are still far away from the projected goal: a developed market economy. Analyzing the causes and re-examining the endogenous character of the transition progress, the authors conclude that the majority of reforms were implemented at a pace conditional on the initial, pre-transition conditions. The results obtained show a significant impact on the economic and institutional heritage of a country, which lasts much longer than was predicted on the eve of the reform process: initial conditions strongly and significantly affect the speed of transition throughout the entire observed period (1989-2007). They also affect the performance of a country: in the first years the transition progress may affect growth in a positive way, but later it becomes insignificant. This can explain some growth peculiarities previously remarked when transition countries were analyzed by means of long-run growth models. Using Barro and Levine-Renelt models the authors show that despite somewhat better results for the second decade of transition many peculiar patterns remain, which could temporarily block poorer transition economies in their attempts to catch up and cause unnecessary losses since transition policies were not properly adjusted to the initial conditions

Fiskalna konsolidacija i premija zarada javnog sektora u Srbiji: Ocene dobijene primenom metoda uparivanja i kvantilne regresije

Fiskalni deficit u Srbiji 2014. godine iznosio je 6,6% BDP, nakon čega je Vlada Srbije uvela mere fiskalne konsolidacije uključujući i smanjenje zarada u javnom sektoru za deset procenata. U ovom istraživanju analiziramo promenu premije zarada javnog sektora Srbije nakon što su mere uvedene. Dodatno, istraživanje upoređuje premiju zarada dva podsektora javnog sektora: sektora države i javnih preduzeća. Premija zarada javnog sektora analizirana je korišćenjem metoda linearne i kvantilne regresije na podacima Ankete o radnoj snazi, uz korišćenje metoda uparivanja. Rezultati ukazuju na to da je u 2014. godini, pre mera fiskalne konsolidacije, premija zarada javnog sektora iznosila 17,9%, pri čemu je premija veća za javna preduzeća nego za sektor države. Premija zarada je bila najviša na dnu, a najniža na vrhu distribucije zarada. Odvojene analize, ipak, ukazuju da ova pravilnost važi samo za sektor države, dok je u sektoru javnih preduzeća premija ista na svim nivoima zarada. U 2015. godini, nakon primene mera fiskalne konsolidacije, premija zarada javnog sektora smanjena je na 12,6%, što ukazuje na smanjenje nejednakosti zarada između javnog i privatnog sektora. Pad premije na celoj distribuciji zarada bio je značajniji za radnike iz sektora države nego za radnike iz javnih preduzeća, stoga povećavajući nejednakost između podsektora unutar javnog sektora

Inflation persistence in central and southeastern Europe: Evidence from univariate and structural time series approaches

The purpose of this paper is to measure inflation persistence in the following countries of Central and Southeastern Europe: Slovakia, the Czech Republic, Poland, Hungary, Romania and Serbia. The study sample covers monthly data from January, 1995 to May, 2010 for Poland, Hungary and Slovakia, from January 1994 to May, 2010 for the Czech Republic, and from January, 2002 to June 2010 for Romania. The shortest sample used, from January, 2003 to September, 2010, was for Serbia and is due to the late start in the transition process. The results of this study enriched the existing ones on this topic by extending the sample period to cover even the recent years of relatively higher inflation rates and by including Romania and Serbia, which were not previously considered. The study led to two main findings: first, inflation of moderate to high magnitude persistence in Hungary, Poland, Romania and Serbia, and inflation of smaller order persistence in Slovakia and the Czech Republic was detected within the Markov switching model approach. In addition, the changes in inflation persistence often correspond to changes in variability and mean of inflation. Second, New Keynesian Phillips Curve represents a valid structural approach to describe the inflation dynamics in this region. In all the six cases studied, weights on backward and forward looking behaviors were significant, while the impact of the driving variable was insignificant only once. It is found that significant influence of the economic driving variable can be captured by real gross wage inflation and real broad money growth. The estimates show that the backward-looking term plays an important role in determining the inflation dynamics. Similar conclusions are drawn by using quarterly data in econometric estimations for the selected countries

Public debt sustainability in Serbia before and during the global financial crisis

We have analyzed the behaviour of primary fiscal balance and public debt in Serbia before and in the aftermath of the global financial crisis. The results of our analysis are: i) public debt to GDP ratioexhibits (near) unit root behaviour with an overall upward time trend; ii) the response of primary fiscal balance to public debt has been insufficient to mean revert the upward trend in government debt; iii) the efforts of the Serbian government to repay the debt principal after the fiscal rule breach have not been persistent, providing empirical support to the fiscal fatigue hypothesis; iv) the government budget constraint has deteriorated since the beginning of the global financial crisis; v) the response of primary fiscal balance to public debt from the onset of the global financial crisis has dropped more severely in comparison to other European economies

Fiscal Reaction to Interest Payments-the Case of Serbia

We focus on the response of primary fiscal balance to interest payments and borrowing costs on Serbian public debt before, during and in the aftermath of the global financial crisis. Our analysis reveals: i) policy makers financed up to 50% of each percentage point increase in interest payments to GDP ratio with new public debt issuance; ii) the government has responded to rising interest payments and borrowing costs by reducing primary fiscal balance from the onset of the global financial crisis; iii) the response of primary fiscal balance to interest payments mimics the response of primary fiscal balance to the costs of borrowing; iv) fiscal austerity measures adopted after the breach of fiscal rule for public debt have been insufficient to stabilize fiscal policy stance in Serbia