Linkage between external and internal imbalance: The case of Serbia

Zivkov Dejan, Njegic Jovan, Ljumovic Isidora
2013 Industrija  
After a while almost all transition and emerging countries that have entered into the process of economic reforms became attractive for foreign direct investments and foreign loans. Consequently, huge amount of capital inflow lead to the surpluses in the financial-capital account. Capital that has entered the system usually converts into the local currency and thus contributes to the growth of money supply in the system. However, high level of money supply leads to internal imbalances such as
more » ... mbalances such as relatively high inflation and unstable exchange rate. In this paper authors try to give an answer to whether above described scenario is characteristic for Serbian transition economy. In this process the paper use linear regression, vector autoregression (VAR) and error correction model. Veza između spoljašnje i unutrašnje neravnoteže -Primer Srbije Apstrakt: Skoro sve tranzicione zemlje koje su ušle u proces ekonomskih reformi posle određenog vremena su postale privlačne za strane direktne investicije i strane kredite. Posledično došlo je do velikog priliva kapitala koji je doveo do suficita u kapitalno-finansijskom bilansu. Kapital koji je ulazio u 1 Higher school of profesional business studies, dejanzivkov@gmail.com 2 Higher school of profesional business studies, jovan.nj@gmail.com 3 Economics institute, Belgrade, isidora.ljumovic@ecinst.org.rs 4 This research Paper was the part of the project No.179001 financed by the Serbian Ministry of Education, Science and Technological Development rastu ponude novca u sistemu. Međutim, visoka ponuda novca utiče na pojavu unutrašnjih neravnoteža kao što su relativno visoka inflacija i nestabilan devizni kurs. U radu ćemo pokušati da damo odgovor na pitanje da li je gore opisani scenario karakterističan za srpsku tranzicionu privredu. U tu svrhu korišćena je sledeća metodologija: linearna regresija, vektorska autoregresija i korekcija greške ka ravnoteži. Ključne reči: spoljna i unutrašnja neravnoteža, kanal transmisije, vektorska auto-regresija, model korekcije ka ravnoteži
doi:10.5937/industrija41-4562 fatcat:wnfanghq65agrhi7i7gfnfhnfy