New Keynesian macroeconomics: Empirically tested in the case of Republic of Macedonia

In this paper we will investigate the issue of inflation and unemployment trade off and the money and output. In the part where we use data we will investigate this relation with data for Macedonian macroeconomic aggregates. Since 1991 Macedonia has gone from command to a market economy (process called transition). This resulted in a high level of poverty and unemployment. Unemployment was a problem even before 1990, in 1970 in Macedonia were registered 20% unemployed, and in 1991 already there were 24% unemployed but the situation with the unemployment later further deteriorated.

Some factors that contributed to the high levels of unemployment are: low export intensive economy, low level of FDIs, decline of economic activity, large informal economy, inefficient labor market policies weak law enforcement and rigid labor legislation. In one study for transition vs OECD countries (Cazes, 2002), was tested whether policies that promote social dialogue, extending it to pay higher attention to employment promotion and unemployment reduction and to ensure more labor market stability, are to be on political agenda rather than just a pure deregulation. And the results were that social dialogue is more efficient than just pure deregulation. Later in the section Money and Output we are testing the monetary policy efficiency in a small economy like Macedonia.
The research here includes money supply as a conventional channel of monetary policy and how does money supply affects growth of GDP. We employ VAR technique and OLS technique for estimations.

This paper has already been published as:

Josheski, Dushko; Lazarov, Darko (2012) : New Keynesian Macroeconomics: Empirically tested in the case of
Republic of Macedonia, http://


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  • MM van Wijck says:

    14-0-2018 MM van Wijck
    The statement: Money imput could not influence the degree of growth would in general be absurd.
    It could be understood if money imput consists in borrowed amounts, and this interpretation
    would be the most integer in conventional economy, however not fruitfull in practice. Borrowed money
    imputto introduce more robots, causing more labourlessness and still resulting in higher prices and less
    consumption could still respond to an economic law: to reach an optimal result with the least
    degree of effort.