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Preliminary communication

From the impossible monetary trinity towards economic depression

Stjepan Zdunić ; Stjepana Ljubića Vojvode 12, Zagreb, Croatia

Fulltext: english, pdf (965 KB) pages 395-422 downloads: 795* cite
APA 6th Edition
Zdunić, S. (2011). From the impossible monetary trinity towards economic depression. Zbornik radova Ekonomskog fakulteta u Rijeci, 29 (2), 395-422. Retrieved from https://hrcak.srce.hr/75209
MLA 8th Edition
Zdunić, Stjepan. "From the impossible monetary trinity towards economic depression." Zbornik radova Ekonomskog fakulteta u Rijeci, vol. 29, no. 2, 2011, pp. 395-422. https://hrcak.srce.hr/75209. Accessed 6 Dec. 2019.
Chicago 17th Edition
Zdunić, Stjepan. "From the impossible monetary trinity towards economic depression." Zbornik radova Ekonomskog fakulteta u Rijeci 29, no. 2 (2011): 395-422. https://hrcak.srce.hr/75209
Harvard
Zdunić, S. (2011). 'From the impossible monetary trinity towards economic depression', Zbornik radova Ekonomskog fakulteta u Rijeci, 29(2), pp. 395-422. Available at: https://hrcak.srce.hr/75209 (Accessed 06 December 2019)
Vancouver
Zdunić S. From the impossible monetary trinity towards economic depression. Zbornik radova Ekonomskog fakulteta u Rijeci [Internet]. 2011 [cited 2019 December 06];29(2):395-422. Available from: https://hrcak.srce.hr/75209
IEEE
S. Zdunić, "From the impossible monetary trinity towards economic depression", Zbornik radova Ekonomskog fakulteta u Rijeci, vol.29, no. 2, pp. 395-422, 2011. [Online]. Available: https://hrcak.srce.hr/75209. [Accessed: 06 December 2019]

Abstracts
The aim of the paper is to determine the interdependency of both balance of payments and fiscal deficit in the context of liberalized systems of capital flows with mainly stabile and appreciated exchange rate and their impact on the dynamics of growth of transition economies of Central and Eastern Europe with special retrospect to Croatia. In the research we used a classical econometric model for aggregated series of data of a group of transition countries, and individually for Croatia and Poland. We determine a significant regression interconnection between fiscal and balance of payments deficits for the group of transition countries, and individually for Croatia, with the exception of Poland and Eurozone. Furthermore, we explore the interdependency of these deficits with the growth rate of gross domestic product of analysed CEE countries and Croatia, where we obtain only partially significant regression results. The final conclusion of the analysis is the existence of significant inverse relationship of balance of payments and fiscal deficits of aggregates of transition economies and Croatia. Growth rates of gross domestic product loosely depend on the balance of payments deficit of groups of transition countries, which cannot be concluded for Croatia. In the case of relationship between the growth rate of gross domestic product with current budget deficits of the analyzed group of transition countries we do not obtain satisfactory significance. From the entire analysis we can conclude that the policy of reducing the balance of payments deficit with the secondary goal of reduction of budget deficit and a decrease in foreign debt, in present condition, has a pro-recessionary effect for the majority of transition countries.

Keywords
Twin deficit; monetary trinity; econometric model; fixed exchange rate; currency clause; liberalized financial market; depression

Hrčak ID: 75209

URI
https://hrcak.srce.hr/75209

[croatian]

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