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.