engleski

DEFICIT CUTS, JOBS LOSSES AND LONG-RUN ECONOMIC GROWTH IN CROATIA

In this paper, we study the relationship between the deficit, unemployment, and economic growth in the long term in Croatia. Theoretically, the reduction of public spending should impact positively on unemployment and should reduce unemployment. In this paper, we show how short and long-term effect is to reduce the economic growth and what is the justification in reducing public spending in times of crisis. Then we will answer to the question of whether it might be just the opposite, increase in public spending as a generator of economic growth in the short term and systematic work, and restructuring the economy to enable long-term stability in the country. One of the questions that this paper will answer is what econometric model is applied to study the effects of certain variables on economic growth (public spending, deficits, ...) as the most appropriate and best solution. Empirical results provide evidence that the nominal deficit and the overall unemployment explains most variations of real GDP. However, the major effect on real GDP is due to real private consumption per capita.

Deficit ; Unemployment ; Economic Growth ; Croatia

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