Makroekonomske, institucionalne i financijske odrednice deficita tekućeg računa u Sjevernoj Makedoniji

Abstract

The role of current account balances in macroeconomic policy is progressivelyhigh, especially in transition countries. Using yearly level data for a 1994-2022period, based on co-integration analysis, this research empirically investigates themacroeconomic, institutional, and financial determinants of the current accountdeficit in North Macedonia. The results of the study reveal that a country’s currentaccount deficit is significantly affected by domestic demand factors like realeffective exchange rate, output gap, and trade openness, the fiscal-related factor ofgross debt position, the institutional-related factor of economic freedom, legal andproperty rights, regulatory index, control of corruption, government effectiveness,as well as financial development captured by money supply. The study also findsout that the country has recorded more deficit in the current account thanpotentially expected during two time periods, the pre-financial crisis period 2001-2008 and during the COVID-19 crisis period 2019-2022.