engleski

Efficiency of anti-inflation paradigm in the long run

At this moment, metaphorically speaking, Croatian economic science seems to be in the state of a "slumber", in hammock hanging between the two trees. The first "tree" is represented by doctrinal debates within which the majority of the "official" economic profession is still insisting on an outdated model of "hard budget constraints", which was virtually abandoned in all developed market economies that were hit by the latest crisis. In Croatia, this model of growing state budget deficit mainly serves as a basis for arbitrary economic policy making motivated primarily by the dictates of particular interests with differentiated powers. The smaller part of un-official economic profession promotes the model of development based on the assumption of ambiguously or incompletely explained structural reforms, thereby conceptually just "swimming" within the paradigm of previously mentioned model and concentrating on "fixing" and "improving" its performances. The second "tree" is represented by the real economic developments over a long stabilization cycle in the period from 1980 to 2010. Even just a glance at the long-term trends in key macroeconomic variables points out that a significant part of the current debates is redundant. Moreover, a lack of focus on real issues due to which Croatia is found in this specific position, as well as the ignoring of these issues makes many seemingly intensive Croatian public debates as irrelevant view from "the closet". Both of these two "trees" seek to investigate their "resistance" to the profound changes and tectonic shifts awaiting national economy and which cannot be solved by sheer inertia of EU "accession" process. Moreover, the experience of several EU Member States clearly indicates the need for even larger (not smaller) theoretical and practical considerations of their own development path within the European Community.

budget deficit; stabilisation policy; structural reforms; development; Croatia

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