Determinants of Current Account in Cases of Serbia and Romania: Time-Varying Parameters Approach

Abstract

Following competing theories, the paper brings the determinants of the Serbian and Romanian current account dynamics with policy implications. The research sample consists of quarterly time series data over the period 2004q1-2017q2 and 2007q1-2017q4 for the cases of Serbian and the Romanian case, respectively. The estimates from the state space model with time-varying parameters (TVP) approach suggest that role of domestic demand is significant in both cases even though more prominent in case of Serbia. Marshall-Lerner conditions were fulfilled in case of Serbia while not in the Romanian case. The effects of money supply on the current account is found to be in line with the monetary approach in case of Romania while in the Serbian case the effect of an increase in the money supply is positive. Consequently, to resolve the issue of the current account deficit the research findings suggest the country-specific policy mix for each country.

Challenges of financing the current account deficit of the Republic of Serbia

“…In most developing countries, the CAD occurs as a result of a negative balance in the foreign trade exchange of goods (Cota et.al. 2017;Bošnjak, 2019). This is also the case with the RS (Table 1), where the level and dynamics of the CAD is primarily determined by the negative balance of goods (Boljanović 2012;Bucevska, 2017, Kovačević 2018.…”

Pengaruh Kredit Bank Kepada Sektor Swasta, Kredit Bank Kepada Sektor Pemerintah, Serta Kurs Terhadap Neraca Transaksi Berjalan Di Negara-Negara Asean

“…menemukan bahwa volume kredit memiliki pengaruh positif signifikan terhadap transaksi berjalan di Turki. Ada pula penelitian dari(Bošnjak, 2019) menemukan bahwa kredit kepada sektor swatsa memiliki pengaruh positif dan signifikan terhadap transaksi berjalan di Negara Serbia. Selanjutnya(Nihat, I. Ş. I. K., Suat Serhat Yilmaz, Kilinc, …”