The coronavirus triggered a record fall of GDP in Croatia, 8.1% in 2020, one of the largest declines in the EU. The large macroeconomic shock stemming from the pandemic has affected both supply and ...demand. On the one hand, government measures have imposed unprecedented supply-side restrictions. On the other hand, growing uncertainty affected domestic and foreign demand. Croatia was particularly affected by a plunge in international tourism demand. Such a major macroeconomic shock poses a challenge for estimating potential GDP, which is difficult to estimate even in stable economic conditions. When estimating potential GDP in the context of the corona crisis, the main issue is the breakdown of the shock into a permanent and a temporary part (supply and demand shock). In this paper, we try to give the most logical breakdown of Croatian data and describe possible methodological approaches to the estimation of potential GDP during the pandemic.
Environmental policies are becoming an important part of agricultural policy portfolio in the EU, which is binding on Croatia. This paper seeks to evaluate potential sectoral effects of several ...nitrogen pollution reduction policy measures within CGE model for Croatia. Finding appropriate agri-environmental policy design represents a typical optimization problem. Thus, the paper attempts to find potential agri-environmental measures which comply with supranational directives without jeopardizing other economic policy goals. Results show that polluter-pays principlebased measures, if not accompanied by the provider-gets principle measures, could have relatively large negative economy-wide effects in Croatia. However, these effects can be reduced by the appropriate policy mix.
This paper deals with tertiary education efficiency and effectiveness across 24 European Union countries in four sub-periods between 2004 and 2015. The efficiency scores are computed using Data ...Envelopment Analysis (DEA). We try to raise awareness of the quality, and not of the quantity, of educational outputs and inputs by introducing quality-based correction of the DEA efficiency score, which we regard as effectiveness. Our results show that quality considerations affect the relative positions of countries regarding their efficiency scores. In other words, some less developed countries, which are efficient in the quantity-based model, fail to reach the defined efficiency border when considering some quality indicators of outputs. On the other hand, some inefficient developed countries increase their DEA-based ranking and achieve effectiveness (quality-based efficiency). The same is true for input quality considerations. Since tertiary education cannot be expected to provide the same quality of outcomes with different input qualities, efficiency improves (deteriorates) in the input-output quality-based model in many countries with low (high) quality student bases.
There are two basic tendencies operating simultaneously in every merger case: i) welfare gains due to efficiency related price reductions and ii) welfare losses associated with rising market power ...and resulting higher prices for consumers. The question of which will prevail is theoretically ambiguous, and consequently has to be settled empirically. The main objectives of this paper are to explore the effects of mergers on efficiency of consolidated firms, and to study their effects on prices in the trade and manufacturing sectors. To explore the effects of mergers on efficiency and prices we employ both a micro and macro approach by relying on firm-level data in the analysis of efficiency effects and on national-level data in the evaluation of price effects of mergers by using the Difference-in-Difference (DiD) approach on a sample of merger cases regulated by the European Commission (EC) during the 2010-2013 period. The DiD based results show that consolidated firms performed better than their competitors in the second year following the merger. Estimated efficiency gains seem to be led by efficiency growth of merged firms in the manufacturing sector. At the same time, we find evidence that compared to their unaffected counterparts, countries and economic activities in which the consolidation took place experienced a higher associated inflation in the year of the merger. Therefore, our results suggest that price effects unfold in the year when the merger is realized while efficiency effects occur with a delay of two years.
The general theory of twin deficits hypothesis does not consider specific characteristics of domestic tax systems, i.e. whether the revenue side of the budget is dominated by indirect or by direct ...taxes. The main hypothesis of the paper is that in countries with fiscal systems dominated by indirect taxes, the deterioration of the current account balance would imply higher fiscal revenues due to larger imports and consumption. The hypothesis is based on the characteristics of domestic tax systems of Bulgaria, Croatia, Poland and Romania in which indirect tax revenues account for the majority of total budget tax revenues. Results suggest that the co-movements of the current account and the fiscal balance cannot be explained by the twin deficit theory in countries with indirect tax-oriented systems. These results imply that only the structural economic transformation and export orientation of the economy may reverse the causality direction between two deficits.
Ovaj rad analizira učinke nekonvencionalnih mjera monetarne politike Europske centralne banke (ECB) na nejednakost i (re)distribuciju dohotka u odabranim zemljama članicama eurozone. Pritom je rad ...fokusiran na empirijsko utvrđivanje učinaka nekonvencionalnih mjera monetarne politike ECB-a na odabrani skup makroekonomskih i financijskih indikatora za koje se smatra da imaju implikacije na (re)distribuciju dohotka, te na Gini koeficijent kao temeljnu mjeru ekonomske nejednakosti. Empirijska analiza provedena je u dva koraka. U prvom koraku se na razini eurozone identificira šok monetarne politike ECB-a primjenom strukturnog vektorskog autoregresijskog modela (SVAR) s restrikcijama predznaka. U drugom koraku se identificirani šok monetarne politike ECB-a integrira u VAR modele pojedinačnih zemalja. Na temelju provedene analize zaključuje se da nekonvencionalne mjere monetarne politike ECB-a više povećavaju cijene dionica nego plaće u svim analiziranim zemljama. Uz pretpostavku da nadnice čine relativno veći udio u raspoloživom dohotku stanovništva slabijeg imovinskog stanja u odnosu na imućnije stanovništvo, temeljem ovih rezultata bi se moglo zaključiti da nekonvencionalne mjere ECB-a povećavaju nejednakosti unutar zemalja. Međutim, analiza učinaka monetarne politike ECB-a na nejednakosti mjerene Gini koeficijentom ne potvrđuje ovaj zaključak, ali ga ni ne opovrgava. Pritom je pozitivan efekt ekspanzivnog monetarnog šoka na dohotke od rada i kapitala kvantitativno veći u periferiji eurozone u odnosu na odabrane zemlje centra. Iako bi ovakav rezultat implicirao da nekonvencionalne mjere ECB-a doprinose smanjenju nejednakosti među analiziranim zemljama centra i periferije, u analizi se nailazi i na oprečne rezultate.
This paper analyzes the effects of unconventional monetary policy measures of the European Central Bank (ECB) on inequality and (re)distribution of income in selected euro area member states. The paper focuses on a empirical estimation of the effects of unconventional monetary policy measures by the ECB on selected macroeconomic and financial indicators that have implications for (re)distribution of income, as well as on the Gini coefficient as a commonly used measure of economic inequality. The empirical analysis is performed in two steps. In the first step ECB's monetary policy shock is identified using sign restrictions in a structural vector autoregressive model (SVAR). In the second step, identified monetary policy shock is included in the country-specific VARs. The results indicate that the ECB's unconventional monetary policy increases stock prices more than wages in all analyzed countries. Assuming that wages make up a relatively larger share of disposable income in the lower-income vs high-income population, these results suggest that the ECB's unconventional measures increase inequalities within countries. However, the analysis of the effect of the ECB's monetary policy on the Gini coefficient neither confirms nor rejects this conclusion. The positive effect of the expansionary monetary shock on labor and capital incomes is quantitatively larger in the euro area periphery than in analyzed core euro area countries. Although such a result would imply that the ECB’s unconventional measures contribute to the reduction of core-periphery inequalities in the analyzed counties, we also present some evidence that contradicts this view.
Ovaj rad analizira učinke nekonvencionalnih mjera monetarne politike Europske centralne banke (ECB) na nejednakost i (re)distribuciju dohotka u odabranim zemljama članicama eurozone. Pritom je rad ...fokusiran na empirijsko utvrðivanje učinaka nekonvencionalnih mjera monetarne politike ECB-a na odabrani skup makroekonomskih i financijskih indikatora za koje se smatra da imaju implikacije na (re)distribuciju dohotka, te na Gini koeficijent kao temeljnu mjeru ekonomske nejednakosti. Empirijska analiza provedena je u dva koraka. U prvom koraku se na razini eurozone identificira šok monetarne politike ECB-a primjenom strukturnog vektorskog autoregresijskog modela (SVAR) s restrikcijama predznaka. U drugom koraku se identificirani šok monetarne politike ECB-a integrira u VAR modele pojedinačnih zemalja. Na temelju provedene analize zaključuje se da nekonvencionalne mjere monetarne politike ECB-a više povećavaju cijene dionica nego plaće u svim analiziranim zemljama. Uz pretpostavku da nadnice čine relativno veći udio u raspoloživom dohotku stanovništva slabijeg imovinskog stanja u odnosu na imućnije stanovništvo, temeljem ovih rezultata bi se moglo zaključiti da nekonvencionalne mjere ECB-a povećavaju nejednakosti unutar zemalja. Meðutim, analiza učinaka monetarne politike ECB-a na nejednakosti mjerene Gini koeficijentom ne potvrðuje ovaj zaključak, ali ga ni ne opovrgava. Pritom je pozitivan efekt ekspanzivnog monetarnog šoka na dohotke od rada i kapitala kvantitativno veći u periferiji eurozone u odnosu na odabrane zemlje centra. Iako bi ovakav rezultat implicirao da nekonvencionalne mjere ECB-a doprinose smanjenju nejednakosti meðu analiziranim zemljama centra i periferije, u analizi se nailazi i na oprečne rezultate.
There are two basic tendencies operating simultaneously in every merger case: i) welfare gains due to efficiency related price reductions and ii) welfare losses associated with rising market power ...and resulting higher prices for consumers. The question of which will prevail is theoretically ambiguous, and consequently has to be settled empirically. The main objectives of this paper are to explore the effects of mergers on efficiency of consolidated firms, and to study their effects on prices in the trade and manufacturing sectors. To explore the effects of mergers on efficiency and prices we employ both a micro and macro approach by relying on firm-level data in the analysis of efficiency effects and on national-level data in the evaluation of price effects of mergers by using the Difference-in-Difference (DiD) approach on a sample of merger cases regulated by the European Commission (EC) during the 2010-2013 period. The DiD based results show that consolidated firms performed better than their competitors in the second year following the merger. Estimated efficiency gains seem to be led by efficiency growth of merged firms in the manufacturing sector. At the same time, we find evidence that compared to their unaffected counterparts, countries and economic activities in which the consolidation took place experienced a higher associated inflation in the year of the merger. Therefore, our results suggest that price effects unfold in the year when the merger is realized while efficiency effects occur with a delay of two years.
This paper examines the effects of lower labor tax burden in Croatia by using Computable general equilibrium (CGE) model. It is a 5-sector (households, firms, government, investors and foreigners) ...model and economy is disaggregated on three highly aggregated sectors. One of the major advantages of CGE modeling is the evaluation of the overall effects of policy changes, shocks and reforms in the economy. We do this by lowering taxes on labor and simulating changes of all endogenous variables in the model simultaneously. Lastly, we provide sensitivity analysis results. Our results suggest that it is possible to encourage domestic production by reducing taxes on labor, but the potential effects on unemployment should be revised as to get more accurate estimates.
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