On 15 September 2016, the National Bank held the 22nd session of the Researchers Club, at which papers titled “FDI influence by sectors on the economic growth in Central, East and Southeastern Europe” by Mite Mitevski and Dijana Janevska-Stefanova as authors, and “Macedonian Policy Analysis Model (MAKPAM)” by Tibor Hledik, Sultanija Bojceva-Terzijan, Biljana Jovanovic and Rilind Kabashi were presented
On 15 September 2016, the National Bank held the 22nd session of the Researchers Club, at which papers titled “FDI influence by sectors on the economic growth in Central, East and Southeastern Europe” by Mite Mitevski and Dijana Janevska-Stefanova as authors, and “Macedonian Policy Analysis Model (MAKPAM)” by Tibor Hledik, Sultanija Bojceva-Terzijan, Biljana Jovanovic and Rilind Kabashi were presented.
The purpose of the paper of Miteski and Janevska-Stefanova is to evaluate the effects of foreign direct investment in the sectors “industry”, “construction” and “services” to the economic growth of the countries of Central, Eastern and Southeastern Europe. This analysis used data for the period 1998-2013 on the following countries: Macedonia, Serbia, Slovenia, Bulgaria, Croatia, Albania, Bosnia and Herzegovina, Czech Republic, Poland, Hungary, Slovakia, Romania, Estonia, Latvia, Lithuania and Turkey. The model is evaluated by using static and dynamic panel methods. The results of the static model show that foreign direct investment in the sectors “industry” and “services” have a positive impact on growth, while the effects of investments in “construction” are not statistically significant. Additionally, the results obtained by the dynamic model proves those obtained through the static model in view of the important role that foreign direct investment in these two sectors have to encourage growth in the analyzed countries. The paper prepared by the authors Tibor Hledic, Sultanija Bojceva-Terzijan, Biljana Jovanovic and Rilind Kabashi describes MAKPAM (Macedonian Policy Analysis Model) that the National Bank of the Republic of Macedonia uses for preparation of medium-term macroeconomic projections and for policy analysis. MAKPAM represents calibrated new Keynesian model that incorporates the key features of the Macedonian economy – small open economy, with fixed foreign exchange rate and relatively high capital. The model has a gap form, i.e. the real variables are presented as deviations from their respective equilibrated levels, which are estimated by applying Kalman filter, as one of the most appropriate techniques for this purpose. By developing this model, the NBRM is in the group of developed central banks that use structural economic models in making decisions on monetary policy. The paper contains a general discussion of this type of models, as well as a description of the historical development and promotion of MAKPAM. Furthermore, the paper pays particular attention to the structure of the current version of MAKPAM, the key equations and model performance. Specifically, the equations are described in details in the main model blocks: price, real economy, balance of payments and monetary policy. It also shows the adjustment of the model to the specifics of the Macedonian economy, as well as its gradual upgrades in order to allow further analysis of the issues significant for the monetary policy. The model reflects the monetary policy transmission mechanism and assist in the quantification of the reaction of the economy to shocks. Consequently, the MAKPAM is an important block in the system of macroeconomic projections in the NBRM, i.e. it represents an important analytical tool to support decision-making in monetary policy.
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