Application of the IS-MP-IA Model and the Taylor Rule to Croatia: Policy Implications for Economic Integration

Applying the IS-MP-IA model and the Taylor rule, this study finds that a lower expected inflation rate, real appreciation, a lower federal funds rate, and more world output would help increase the Croatian output. The insignificance of government deficit spending suggests that the Ricardian-equivalence hypothesis may be applicable to Croatia. The conventional wisdom to pursue currency devaluation to stimulate the economy may not work for Croatia.

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Year of publication:	2006
Authors:	Hsing, Yu
Published in:	Journal of Economic Integration. - Department of Economics and Trade. - Vol. 21.2006, p. 147-156
Publisher:	Department of Economics and Trade
Subject:	IS-MP-IA \| Taylor rule \| deficit spending \| devaluation \| world interest rates

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Type of publication:	Article
Classification:	E52 - Monetary Policy (Targets, Instruments, and Effects) ; E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation ; F41 - Open Economy Macroeconomics
Source:	RePEc - Research Papers in Economics

Persistent link: https://ebvufind01.dmz1.zbw.eu/10009391987