engleski

Economic Crisis in a Small Transition Economy: Monetary and Fiscal Reactions in Croatia

Since the existing economic and financial crisis has been detected as the largest economic shock since Great Depression, the response on it is tried to be found in all economic areas. The paper contains the analysis of the fiscal and monetary reactions to the crisis in Croatia. Its purpose is to compare the national monetary and fiscal measures and trends with the international experiences. After the analysis of crisis causes and consequences, the paper provides the analysis of the international monetary and fiscal response to the crisis. The same methodology used for international analysis is applied for Croatia as well. Due to high external debt and nominal exchange rate anchor the monetary policy reaction in Croatia is mild and inconclusive. On the opposite side, FED and ECB reaction to crisis is much stronger, encompassing the use of unconventional measures. The Croatian fiscal response is in some cases similar to European experience, mostly due to likewise circumstances ; discretionary fiscal policy is limited by deficit constraints and relative high level of public debt.

monetary policy; fiscal policy; crisis; transition economies; Croatia

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