Where macroeconomic instability meets economic growth?

Please cite the paper as:
Filip Fidanoski, Darko Lazarov, Kiril Simeonovski, Bruno S. Sergi, (2018), Where macroeconomic instability meets economic growth?, World Economics Association (WEA) Conferences, No. 1 2018, Monetary Policy after the Global Crisis, 19th February to 20th April, 2018


Long-term macroeconomic stability is the most important objective of benevolent decision-makers. Moreover, the link between economic growth and macroeconomic stability becomes very intriguing for the scholars during and after the moments of the Great Recession. Our research of the volatility-growth nexus in the case of Macedonia has resulted in different and consistent remarks. First, we can agree with the authors that the concept of macroeconomic stability is too comprehensive and complex and therefore it is challenging to provide a suitable proxy. The break-down of the concept to financial, economic and price stability is one possible way to address and capture important features of macroeconomic stability. Further, we have documented that the Macedonian economy remained relatively immune to the occurrence of crises during the period of distress in the wake of and during the Great Recession from 2007 to 2009, although it signalled warnings about the risks for potential banking and financial crises. Also, the period of restoring and maintaining of financial stability after Q2 2010 has been marked by overly conservative behaviour by Macedonian banks, lack of investor confidence and absence of robust growth. This confirmed that the financial stability reached a state at which any additional increase would further sterilise the economy. Finally, our results show that the lagged values of growth variable as well as the growth volatility and the financial stability indicator all have negative relationship with the growth rate. Regarding the price volatility, our findings suggests that the immediate effect is negative, yet positive after one quarter considering that the producers will likely have enough time to include price volatility in the calculations and thereby mitigate the adverse effects.

Keywords: , , ,

Recent comments



  • Aadil Ahmad Ganaie says:

    I have gone through this paper and found it interesting. However, i want to draw the attention of the authors towards that, there are certain chances that higher economic growth for a long period may give rise to an institutional framework that will support macroeconomic stability. So likely chances arise that the causation may run from growth to stability. Further, economic policy uncertainty index which is available for some countries can act as a better indicator to show macroeconomic stability or the part of it.

  • monetarypolicyconferenceadmin says:

    I completely agree. There are some works in that regard, but we were not interested to include political neither institutional factors.

  • WIJCK MM van says:

    March 14, 2018 at
    All factors in no relationship with growth and one (price) converting.
    If no relationship is found significantly, further analysis of seperate constituents of factors
    in relation to growth would probably relevate specific relations. Constituents not indicated
    like f.i. consumers demand on not presented products could also influence growth if
    compared with real exchange of the lacking product in other regions. Price could
    contaminate with growth if it is defined as a constituent of growth if exchanged. Also: If
    the price is growing , the exchange is lowering unless a new wanted product is offered,
    or unless the price is lowering, consumers’ income is rising, or less overproduction is realized.
    Notes could contradict the economic laws. Specification should reveal.

  • Henry de-Graft Acquah says:

    Good Paper. Provides clear insights on the link between macroeconomic stability
    and economic growth.