Lazarov, Darko and Slaveski, Trajko (2014) Macroeconomic volatility and economic growth: Empirical estimation for the CEE countries. In: Macroeconomic volatility and economic growth: Empirical estimation for the CEE countries, 18-20 Oct 2014, Antalya, Turkey. (Unpublished)
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Abstract
Scientific research has questioned the role and importance of macroeconomic policy as a determinant of long‐term economic growth.A macroeconomic policy framework conducive to growth can be characterized by five features: a low and predictable inflation rate; an appropriate real interest rate; a stable and sustainable fiscal policy; a competitive and predictable real exchange rate; and a balance of payments that is regarded as viable. While there seems to be a correlation between macroeconomic variables and economic growth (for instance, negative and statistically significant correlation between inflation rate, government size and economic growth), this correlation might disappear when controlling for the fundamental factors that determine growth (institutions, human capital, R&D). In that regard, maybe the macroeconomic volatility, rather than the macroeconomic performance does matter for growth. The main goal of this paper is to investigate how macroeconomic volatility affectseconomic growth by applying panel regression analysis for a group of CEE countries with special focus on the Republic of Macedonia. As proxy variables for the macroeconomic volatility in the research, we take the standard deviation of inflation rates, discretional fiscal policy, government size and output volatility. Also, we investigate the volatility of the cyclical components of some important macroeconomic variables for countries in our sample before and during the global economic crisis, so as to see how the business cycles detriment the economic growth. Additionally, we use the so-called Hodrick-Prescott filter as a very useful method to analyze the cyclical component and variation in the growth trend.
| Item Type: | Conference or Workshop Item (Paper) |
|---|---|
| Subjects: | Social Sciences > Economics and business |
| Divisions: | Faculty of Economics |
| Depositing User: | Darko Lazarov |
| Date Deposited: | 10 Dec 2015 14:43 |
| Last Modified: | 10 Dec 2015 14:43 |
| URI: | https://eprints.ugd.edu.mk/id/eprint/14462 |
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