The objective of this paper is to analyze the governments spending - economic growth nexus and examine the asymmetries in the adjustment process between the two in the Croatian and Slovenian economy. The baseline relationship model between the variables of interest is grounded on the assumption of Wagner's Law and Keynesian hypothesis. A possible nonlinear asymmetric effect of governments spending and GDP toward their long-run equilibrium is tested for each case. The test results indicate the presence of nonlienarity in the relationship between public spending and GDP in Croatia and Slovenia as well. Eventually, country specific threshold cointegrating relationship between the considered variables are estimated and tested. The results reveal well suited threshold vector error correction model with significantly different error correction adjustments in normal and stress regimes for each of the two sample country
Hrvatska narodna banka ne temelji monetarnu politiku na ciljanju inflacije te devizni tečaj služi kao intermedijarni cilj i temelj vođenja monetarne politike u Republici Hrvatskoj. Inflacija u Republici Hrvatskoj dominantno je određena stopama inflacije u inozemstvu. Na uzorku mjesečnih podataka o indeksu potrošačkih cijena u Republici Hrvatskoj od siječnja 1997. do studenog 2015., prilagođen je ARIMA (0,1,1) x (0,1,1)12 model koji opisuje dinamiku kretanja indeksa potrošačkih cijena u Republici Hrvatskoj. Procijenjeni model se može koristiti za pouzdano prognoziranje kretanja potrošačkih cijena u Republici Hrvatskoj. Nadalje, kako bi se istražile karakteristike promjenjivosti indeksa potrošačkih cijena testirano je nekoliko ARCH modela. Provedeni testovi su pokazali da ARCH (1) model najbolje objašnjava promjenjivost indeksa potrošačkih cijena u Republici Hrvatskoj. ; Croatian National Bank is not targeting inflation but exchange rate as the nominal anchor or intermediary goal of monetary policy and inflation in Croatia is a dominantly foreign driven phenomenon. Using monthly data on CPI in Croatia from January 1997 up to November 2015, ARIMA (0,1,1) x (0,1,1)12 model is fitted as the one describing CPI behavior pattern and therefore reliable for CPI forecasting. Furthermore, to establish its volatility pattern several ARCH family models are tested and ARCH (1) model is found to be the best fitted one in explaining CPI volatility development in Croatia.
Dužnički financijski instrumenti su specifične zbog komponente dospijeća koju sadržavaju te stoga konvencionalni pristupi u procjeni njihovih volatilnost mogu biti neprimjereni. Rad je usmjeren na modeliranje i prognoziranje volatilnosti cijene dužničkih vrijednosnih papira uzimajući u obzir komponentu njihovog dospijeća. U radu se uzima u obzir ovisnost volatilnosti dužničkog vrijednosnog papira o njegovom dospijeću i predlaže jednostavna i primjenjiva tehnike procjene volatilnosti uz željeni interval pouzdanosti. Korištenjem predloženog pristupa u radu su provedene procjene volatilnosti dužničkih vrijednosnih papira denominiranih eurima kao i u kunama koje je izdala Republika Hrvatska. ; Debt-based financial instruments are specific due to the maturity component and conventional approaches in estimating their volatility may not be applicable. This paper focuses on modeling and forecasting price volatility of sovereign debt instruments while taking into account their maturity. In doing so we propose a simple and useful technique for obtaining the desired confidence of volatility estimates. The proposed approach provides price volatility estimates for debt instruments issued by Croatian government denominated in HRK and in EUR.
The main objective of this paper is to explore the relationship between merchandise exports and revealed comparative advantage (RCA) indicators of Croatian exports on the European Union (EU) market. For this purpose the main hypothesis is defined as follows: a Croatian merchandise export is positively correlated with RCA indicators on the EU market. Based on the empirical tests and using the defined econometric model for the period 1995-2012, the main hypothesis of research was confirmed; meaning correlation between indicators of RCA in merchandise exports on the EU market in the long and short run is confirmed. Positive and statistically significant relationship was found between RCA in export of raw materials excluding fuel and level of merchandise export as well as RCA in export of machinery and transport vehicles and level of merchandise export.
Cilj ovog istraživanja je testirati Heckscher-Ohlinov teorem komparativnih prednosti na uzorku trgovine Republike Hrvatske i ostalih članica Europske unije. Heckscher-Ohlinova teorija komparativnih prednosti u većoj mjeri može objasniti međunarodnu trgovinu u slučajevima kada je uzorak zemalja heterogen, u smislu većih razlika u dosegnutom stupnju razvoja i obilnosti proizvodnih faktora. Na temelju dobivenih rezultata proizlazi zaključak da je međunarodna robna trgovina između Republike Hrvatske i ostalih članica Europske unije kako pretpostavlja Heckscher-Ohlinov teorem komparativnih prednosti. U svrhu testiranja osnovne hipoteze rada koristi se više regresijskih modela. Razlika u opskrbljenosti proizvodnim faktorima između Republike Hrvatske i ostalih članica Europske unije bolje objašnjava razlike u jediničnim cijenama proizvodnih faktora nego neto robnu trgovinu Republike Hrvatske s ostalim članicama Europske unije. Empirijska je provjera potvrdila kako neto robna trgovina Republike Hrvatske s ostalim članicama Europske unije pozitivno korelira s relativnom ponudom kapitala. Nije pronađena značajna korelacija između robne trgovine i relativne obrazovanosti hrvatske radne snage, u odnosu na druge članice Europske unije. Na temelju provedene empirijske provjere, može se zaključiti da je Republika Hrvatska, u odnosu na prosjek EU27, relativno opskrbljenija radom kao proizvodnim faktorom te je neto robni izvoz prerađivačke industrije Republike Hrvatske radno intenzivan. Rezultati provedenog istraživanja ukazuju na važnost faktora proizvodnje kao osnove za rast robnog izvoza te gospodarskog razvoja u cjelini. Zaključno, Republika Hrvatska treba više napora uložiti u privlačenje investicija i porast omjera kapitala i rada. ; The goal of this research is to test the Heckscher-Ohlin' theorem of comparative advantages on the sample of the Republic of Croatia and other European Union member countries. Heckscher-Ohlin theorem of comparative advantages can largely explain international trade in cases where the sample of countries is heterogeneous, in terms of the achieved level of development and the production factors abundance. In regards to aforementioned research hypothesis was tested using several regression models. Based on the research results, it can be concluded that the international merchandise trade between Croatia and other European Union (EU) members is in accordance with the assumed by Heckscher-Ohlin comparative advantages theory. The difference in production factors abundance between Croatia and other European Union members better explains differences in production factor unit prices than net merchandise trade. Empirical testing show that merchandise trade between Croatia and other European Union members is correlated with the capital abundance. We found no significant correlation between merchandise trade and relative education level of Croatian labor force in regards to other EU countries. Furthermore, based on the empirical testing, it can be concluded that Croatia in regards to EU27 average, is a labor abundant country and net exports of Croatian manufacturing is labor intensive. Estimated results point out the production factor importance as a base for further merchandise exports development and economic development as a whole. Finally, basic conclusion is that Croatia needs to put more effort on investment attraction and therefore capital to labor ratio increase.
The paper tests for the existence of hysteresis in the net export development patterns of five EU member countries - the Czech Republic, Latvia, Hungary, Slovakia and Slovenia. Based on the quarterly data samples from 1996q1 to 2017q2, country-specific estimates are obtained and tested. Time series estimates point to the fractionally integrated series of net exports for the Czech Republic and Latvia, while the net exports of Hungary, Slovakia and Slovenia are best explained by SETAR (1) model specification. The research results indicate long memory property in the net export series for the Czech Republic and Latvia, thus supporting the existence of hysteresis. The net export dynamics of Hungary, Slovakia and Slovenia are found to be nonlinear and threshold dependent but still slightly different. The paper also found heterogeneity in the dynamics and properties of net exports for the countries examined in this paper. Furthermore, the paper showed an indicative similarity in the change of the contemporary net export development patterns in the sample countries.
The paper aims to examine demand for merchandise exports from Croatia as a function of relative prices and income of the European Union (EU) member countries. Data sample consists of quarterly time series data over the period 2000 q1 -2019 q1. The paper employed standard tests of cointegration and state space model with time-varying parameters approach to examine the relationship between merchandise exports and its assumed determinants. The results revealed demand function for Croatian merchandise exports highly elastic to changes in income and relative prices. Furthermore, there was sizable increase in demand for merchandise exports from Croatia as a consequence of joining EU. Eventually, the results were discussed in context of balance of payments constraints to growth theory and policy implications were derived.
Ovaj rad ima za cilj ispitati elastičnost potražnje za uvozom u Republici Hrvatskoj na promjene u dohotku i relativnim cijenama, istovremeno dopuštajući vremensko variranje parametara potražnje za uvozom. Uzorak podataka sastoji se od kvartalnih podataka vremenskih serija između prvog kvartala 2000. i trećeg kvartala 2018. godine. Korištenjem modela prostora stanja s vremenski različitim parametrima dobivene su i testirane procjene pristupa. Rezultati su pokazali trajnu i visoku dohodovnu elastičnost uvozne potražnje u Hrvatskoj. Međutim, uloga relativnih cijena promijenila se u promatranom razdoblju i na kraju se ne može razlikovati od nule. Rezultati ovog istraživanja podržali su hipotezu konvergencije cijena u Hrvatskoj prema cijenama u zemljama članicama Europske monetarne unije. Nadalje, rezultati nisu pokazali značajan utjecaj na potražnju za uvozom u Republici Hrvatskoj nakon ulaska Hrvatske u Europsku uniju. Rezultati istraživanja pokazuju da bi, zbog relativno visoke dohodovne elastičnosti uvozne potražnje i konvergencije uvoznih cijena, trebalo poticati proizvodnju inovativnih i sofisticiranih proizvoda. ; The paper aims to examine Croatian import demand elasticities to changes in income and relative prices while allowing time variation in parameters of import demand. Data sample consist of quarterly time series data over the period 2000 q1 -2018 q3. Following state space model with time-varying parameters approach estimates were obtained and tested. The results revealed persistent and high income elasticity of import demand in Croatia. However, the role of relative prices has changed over the observed period and eventually cannot be distinguished from zero. The findings from this research supported the hypothesis of prices convergence in Croatia towards the prices within European Monetary Union member countries. Furthermore, results found no significant effect on Croatian import demand when Croatia joined the European Union. The research results indicate that, due to a relatively high income elasticity of import demand and convergence of import prices, production of innovative and sophisticated products should be facilitated.
U radu se istražuju odrednice kretanja tekućeg računa platne bilance Republike Hrvatske primjenom monetarnog apsorpcijskog pristupa platnoj bilanci. Glavna hipoteza rada pretpostavlja da se tekući račun platne bilance u Republici Hrvatskoj može objasniti unutar analitičkog okvira koji se temelji na monetarnom i apsorpcijskom pristupu analizi platne bilance. U radu se primjenjuje suvremeni ekonometrijski pristup nelinearne auto-regresije s distribuiranim pomacima (NARDL) koji uzima u obzir nelinearnu i asimetričnu prirodu odnosa između tekućeg računa platne bilance u Republici Hrvatskoj i njegovih determinanti. Procijenjeni rezultati na tromjesečnom uzorku podataka od prvog tromjesečja 2000. do drugog tromjesečja 2017. godine podupiru glavnu istraživačku hipotezu i potvrđuju da se tekući račun platne bilance Republike Hrvatske može objasniti korištenjem analitičkog okvira utemeljenog na monetarnom i apsorpcijskom pristupu. Domaća potražnja, realni tečajni indeks, te krediti privatnom sektoru i monetarni agregati M4 testirani su kao odrednice tekućeg računa platne bilance Republike Hrvatske. Utvrđeno je da monetarni agregati M4 imaju najveću objašnjavajuću snagu među istraženim monetarnim varijablama. Glavni nalazi ovog rada upućuju na potrebu za mjerama fiskalne politike i uklanjanje ograničenja hrvatskim izvoznicima u pristupu likvidnim sredstvima kako bi se uspostavila vanjska ravnoteža. ; The paper brings the determinants of Croatian current account dynamics under monetary and absorption approach. The main hypothesis of the paper assumes that Croatian current account can be explained within the framework based on the monetary and absorption approach to balance of payments. The research employed newly developed Non-linear Auto-Regression Distributed Lag (NARDL) approach that takes into account nonlinear and asymmetric nature of the relationship between Croatian current account and its determinants. Estimated results on a quarterly data sample from the first quarter of 2000 to the second quarter of 2017 supports the main research hypothesis and reveals that that Croatian current account can be explained using the analytical framework based on the monetary and absorption approach. Domestic demand, real exchange rate index, loans to private sector and monetary aggregates M4 are tested as the determinants of Croatian current account. Monetary aggregates M4 are found to hold the highest explanatory power among tested monetary variables. The main findings of the paper suggest the need for fiscal policy measures and relaxing the liquidity constraints for the Croatian exporters as necessary to obtain external equilibrium.
The aim of this paper is to establish and clarify the relationship between corruption level and development among European Union countries. Out of the estimated model in this paper one can conclude that the level of corruption can explain capital abundance differences among European Union countries. Also, explanatory power of corruption is higher in explaining economic development than in explaining capital abundance, meaning stronger relationship between corruption level and economic development than between corruption level and capital abundance. There is no doubt that reducing corruption would be beneficial for all countries. Since corruption is a wrongdoing, the rule of law enforcement is of utmost importance. However, root causes of corruption, namely the institutional and social environment: recruiting civil servants on a merit basis, salaries in public sector competitive to the ones in private sector, the role of international institutions in the fight against corruption, and some other corruption characteristics are very important to analyze in order to find effective ways to fight corruption. Further research should go into this direction.
