THE SUSTAINABILITY OF SERBIA`S EXTERNAL POSITION: THE IMPACT OF FISCAL ADJUSTMENT AND EXTERNAL SHOCKS

Emir Zildžović

Economic Annals, 2015, vol. 60, issue 204, 31 - 60

Abstract: This paper studies the impact of fiscal policy and external shocks on the sustainability of Serbia’s external position. The key determinants of Serbia`s current account balance are identified using model averaging techniques and are compared with estimates obtained for other small open economies (Poland, Georgia, Morocco, Ukraine, and Estonia). The paper uses estimated influences of macrovariables on the current account balance to generate a rich set of possible outcomes for the external position of the country. The results suggest the importance of fiscal policy for the reduction of external imbalances in all countries in our sample. In particular, credible and sustained fiscal adjustment can reduce current account deficit and stabilize Serbia’s external position close to its current level over the medium term. The analysis also warns that lack of success in fiscal consolidation coupled with external shocks may easily push the external position onto an unsustainable path.

Keywords: Current account determinants; External sustainability; Model averaging; Transition countries; Fiscal policy; External shocks (search for similar items in EconPapers)
JEL-codes: F32 F37 F39 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.ekof.bg.ac.rs/wp-content/uploads/2015/05/360.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:beo:journl:v:60:y:2015:i:204:p:31-60

Ordering information: This journal article can be ordered from
http://ea.ekof.bg.ac.rs/

Access Statistics for this article

Economic Annals is currently edited by Will Bartlett

More articles in Economic Annals from Faculty of Economics and Business, University of Belgrade Contact information at EDIRC.
Bibliographic data for series maintained by Goran Petrić ().