engleski

Monetary and fiscal policy mix in a small open economy: the case of Croatia

In this paper we use structural VAR model to analyse the possibilities of monetary and fiscal policy in achieving main economic policy goals, namely price stability and economic growth, in Croatia from 2004 to 2012. Our main results indicate that expansionary monetary and fiscal policies both have positive effects on economic activity. On the other hand, fiscal expansion leads to nominal exchange rate appreciation while monetary expansion has depreciation effects on nominal exchange rate. Thus the main conclusion of the paper is that coordinated measures of monetary and fiscal policies could achieve both goals, i.e. that fiscal and monetary authorities can stimulate economic growth without endangering price stability.

monetary policy; fiscal policy; SVAR; Croatia

Sveučilište u Rijeci, projekt 13.02.1.2.02, voditelj: prof.dr. Helena Blažić, Ekonomski fakultet Rijeka Hrvatska zaklada za znanost, projekt IP-2013- 11- 8174, voditelj: prof.dr. Helena Blažić, Ekonomski fakultet Rijeka