engleski

Applied Macroeconometrics in Transition Economy: Croatian Experience

The transition process has strongly influenced economic policy and economic structure of Central and Eastern European countries, including Cratia. The most profound change has been a shift from the centrally planned to the market economy. As a result, structural breaks and regime shifts appear in econometric data and thus make applied econometric analysis extremely difficult. When modelling such data the important thing is not to treat these changes as a nuisance but as valuable information to be incorporated in the model in order to perform better forecasts or policy analyses. However, the nature of the particular changes will influence the choice of the model class to represent the relevant macroeconomic relationships. The purpose of modelling will also help determine an appropriate model choice.

transition process; vector autoregressive (VAR) methodology; cointegration

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