Assessing the Impact of Trade Policy on the Macroeconomic System of the RA Using the IS-LM-BP Model / Оценка влияния торговой политики на макроэкономическую систему РА с использованием модели IS-LM-BP

Abstract

This paper employed the IS-LM-BP model to assess the impact of trade policy on the economy of Republic of Armenia, using data from the period 2000-2022. The model integrated internal and external factors, capturing the relationships between production, interest rates, and exchange rates. By applying regression analysis, correlations between key economic variables are examined, and the model's coefficients are estimated. The equilibrium values for endogenous variables were determined through the analytical solution of the system. Scenarios were simulated to gauge the effects of trade policy changes. The findings indicated the importance of factors such as consumption and income relationships, investment sensitivity to interest rates, and the dynamics of exchange rates. Overall, the study's findings shed light on the intricate relationships between trade policy and the Republic of Armenia's macroeconomic indicators. By contributing to the understanding of how trade policy adjustments can impact an economy's key indicators. This study aims to provide valuable information to policy makers and for further research in this area.