Responses of Real Output in Serbia to the Financial and Global Economic Conditions

Yu Hsing, Wen-Jen Hsieh

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

Applying and extending Taylor (1993, 1999) and Romer (2000, 2006), this paper examines output fluctuations for Serbia based on a simultaneous equation model consisting of the open-economy IS function, the monetary policy function, and uncovered interest parity. The GARCH(1,0) model is employed because the residual variance is affected by the past variance. Real GDP is positively affected by the real stock price and real government deficit and negatively influenced by expected real depreciation of the dinar, the world real interest rate, and the inflation rate. There are significant seasonal effects. Therefore, a healthy stock market, a stronger dinar, a lower world real interest rate, a lower inflation rate, and an active fiscal policy will play important roles in the recovery of the Serbian economy.

Original languageEnglish
Pages (from-to)107-114
JournalRomanian Journal of Economic Forecasting
Volume13
Issue number3
Publication statusPublished - 2010

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

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