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Economic research - Ekonomska istraživanja, Vol. 28 No. 1, 2015.

Original scientific paper

https://doi.org/10.1080/1331677X.2015.1059073

Monetary and fiscal policy mix in a small open economy: the case of Croatia

Tomislav Ćorić
Hrvoje Šimović orcid id orcid.org/0000-0002-4040-0899
Milan Deskar-Škrbić orcid id orcid.org/0000-0002-7611-2071

Full text: english pdf 508 Kb

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Abstract

In this article we use a structural vector autoregression (VAR) model to analyse the possibilities of monetary and fiscal policy in achieving main economic policy goals, namely price stability and economic growth, in Croatia from 2004 to 2012. Our main results indicate that expansionary monetary and fiscal policies both have positive
effects on economic activity. On the other hand, fiscal expansion leads to nominal exchange rate appreciation while monetary expansion has depreciation effects on nominal exchange rate. Thus the main conclusion of the article is that coordinated measures
of monetary and fiscal policies could achieve both goals, i.e. that fiscal and monetary authorities can stimulate economic growth without endangering price stability.

Keywords

monetary policy; fiscal policy; SVAR; Croatia

Hrčak ID:

171538

URI

https://hrcak.srce.hr/171538

Publication date:

20.12.2015.

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