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Europe > Montenegro

You are looking at 1 - 9 of 9 items for :

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  • IMF Working Papers x
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Cover IMF Working Papers
Inflation Dynamics in the Western Balkans
Gohar Minasyan
,
Ezgi O. Ozturk
,
Magali Pinat
,
Mengxue Wang
, and
Zeju Zhu
After trailing Euro Area inflation closely in the recent past, inflation in the Western Balkans has accelerated faster since early 2022 on the back of the shocks to global commodity prices, strong recovery from the pandemic, and lingering supply bottlenecks. This paper employs two complementary empirical approaches of an augmented Phillips curve and structural VAR, adapting them to the data availability and country specificities of the Western Balkans, to analyze the inflation dynamics in the region. It finds that international food prices affect not only headline but also core inflation as well as inflation expectations. Further, inflation in the Western Balkans is not just determined by foreign shocks, and domestic factors, aggregate demand shocks in particular, have a significant impact on inflation. These findings imply a possible role for policies to temporarily limit an immediate and complete pass-through of international to domestic food prices while also stressing the importance of an appropriate domestic macroeconomic policy mix to keep inflation expectations anchored and safeguard credibility in the face of high inflation persistence.
Keywords:
Inflation; Western Balkans; international food price shocks; commodity price shocks; Phillips curve; panel data; structural VAR; inflation expectation; inflation dynamics; inflations determinant; inflation development; inflation in the Western Balkans; Food prices; Energy prices; Nominal effective exchange rate; Global; Europe
Cover IMF Working Papers
Labor Taxation in the Western Balkan: Looking Back and Forward
Mr. Alain Jousten
,
Mario Mansour
,
Irena Jankulov Suljagic
, and
Charles Vellutini
This paper examines how labor taxation (personal income taxes and social security contributions) in the Western Balkan contributes to labor market outcomes such as high informality and a significant gender gap in participation rates. We find that limited progressivity combined with high tax wedge on low incomes poses a major twin equity-efficiency challenge in the region, resulting in low redistributive capacity and inadequate incentives to enter the job market. Policy implications are discussed with a view to alleviating the excessively high tax wedges on low incomes, while improving progressivity of income taxation.
Keywords:
Western Balkan; labor taxation; labor tax wedge; personal income tax; corporate income tax; social security contributions; income taxation; SSC reduction; employer SSCs; Labor taxes; Tax wedge; Wages; Labor markets; Europe
Cover IMF Working Papers
Fiscal Deficit and Public Debt in the Western Balkans: 15 Years of Economic Transition
Zsoka Koczan
In this paper we analyze how Western Balkans public finances adapted to the boom-bust cycle. Large capital inflows into emerging European economies during the mid-2000s resulted in rapid economic growth and convergence to EU income levels. This also resulted in improved fiscal positions of most countries, on the back of strong revenue performance. Yet, since the onset of the global economic crisis, many countries have struggled to adjust to the new situation of lower external financing and lower growth.
Keywords:
WP; debt; government; country
Cover IMF Working Papers
Does Supply or Demand Drive the Credit Cycle? Evidence from Central, Eastern, and Southeastern Europe
Greetje Everaert
,
Ms. Natasha X Che
,
Ms. Nan Geng
,
Bertrand Gruss
,
Gregorio Impavido
,
Miss Yinqiu Lu
,
Christian Saborowski
,
Mr. Jerome Vandenbussche
, and
Mr. Li Zeng
Countries in Central, Eastern, and Southeastern Europe (CESEE) experienced a credit boom-bust cycle in the last decade. This paper analyzes the roles of demand and supply factors in explaining this credit cycle. Our analysis first focuses on a large sample of bank-level data on credit growth for the entire CESEE region. We complement this analysis by five case studies (Latvia, Lithuania, Montenegro, Poland, and Romania). Our results of the panel data analysis indicate that supply factors, on average and relative to demand factors, gained in importance in explaining credit growth in the post-crisis period. In the case studies, we find a similar result for Lithuania and Montenegro, but the other three case studies point to the fact that country experiences were heterogeneous.
Keywords:
WP; credit growth; demand and supply; credit demand; credit supply; parent bank; Credit; Eastern Europe; Disequilibrium Model; bank characteristic; excess supply; asset quality; excess demand; credit to household; demand and supply factor; bank funding; demand development; Consumer credit; Credit booms; Loans; Bank credit; Global; Baltics
Cover IMF Working Papers
Fiscal Consolidation in Southeastern European Countries: The Role of Budget Institutions
Mr. Brian Olden
,
Mr. Duncan P Last
,
Mr. Sami Yläoutinen
, and
Ms. Carla Sateriale
This paper assesses the relative strengths and weaknesses of fiscal institutions in ten Southeastern European countries, using recent benchmarking methodologies developed by FAD. The assessment evaluates each country’s understanding of the scale of the fiscal adjustment challenge, its ability to develop a credible consolidation strategy, and its capacity to implement the strategy. Key institutional arrangements, are generally in place, including top-down budgeting and medium-term budget frameworks. Other institutional arrangements require further attention, including macro-fiscal forecasting, fiscal risk analysis, setting fiscal objectives, presence and role of independent fiscal agencies, and top-down parliamentary approval.
Keywords:
WP; European country; budget institution; annual budget; consolidation strategy; orientation debate; Southeastern Europe; Fiscal Consolidation; Budget Institutions; consolidation program; nonfinancial enterprise; policy action; Budget planning and preparation; Fiscal risks; Macroeconomic and fiscal forecasts; Budget execution and treasury management; Eastern Europe; Europe
Cover IMF Working Papers
The Impact of the Global Crisison South-Eastern Europe
Francesco Spadafora
,
Mr. Emidio Cocozza
, and
Mr. Andrea Colabella
This paper analyzes the impact of the global crisis on six South-Eastern European countries. The main objective is to compare macro-financial conditions and policies in the run-up to the crisis as well as to compare the policy responses to it, so as to highlight, inter alia, possible country-specific constraints. While sharing a common pre-crisis pattern of strong capital inflows and robust growth, a key difference in the conduct of macroeconomicpolicies is that some countries adopted expansionary (and procyclical) fiscal policies. These moves exacerbated external vulnerabilities and compromised the ability to discretionarily use the fiscal instrument in acountercyclical fashion.
Keywords:
WP; current account; budget deficit; foreign currency; financial support; core inflation; international capital flows; current account adjustment; IMF financial support; FYR Macedonia; transmission mechanism; short-term debt; Current account deficits; Budget planning and preparation; Government debt management; Global; Western Europe
Cover IMF Working Papers
Do IMF Programs Improve Economic Governance?
Mr. Jiro Honda
This paper examines the effects of IMF financial assistance on economic governance in developing countries, based on panel data analyses of perceived governance indicators. It uses a two-stage approach to address possible endogeneity issues. The results show that successful implementation of IMF programs is associated with improvements in the quality of economic governance. Specifically, the paper finds statistically robust results that IMF concessional programs through the Poverty Reduction and Growth Facility tend to enhance the rule of law and strengthen control of corruption. Through this exercise, however, no statistically significant effect is observed for assistances under the General Resource Account.
Keywords:
WP; governance; IMF program; IMF assistance
Cover IMF Working Papers
Foreign Direct Investment in Southeastern Europe: How (and How Much) Can Policies Help?
Ms. Elina Ribakova
,
Mr. Balázs Horváth
,
Mr. Dimitri G Demekas
, and
Mr. Yi Wu
Gravity factors explain a large part of Foreign Direct Investment (FDI) inflows in Southeastern Europe-a region not comprehensively covered before in econometric studies-but hostcountry policies also matter. Key are policies that affect relative unit labor costs, the corporate tax burden, infrastructure, and the trade regime. This paper develops the concept of potential FDI for each country, and uses its deviation from actual levels to estimate what policies can realistically be expected to achieve in terms of additional FDI. It also finds evidence that above a certain threshold, the importance of some policies for attracting FDI is distinctly different.
Keywords:
WP; FDI flow; aggregate FDI panel regression; FDI stock; source country; cross-section regression
Cover IMF Working Papers
Budget System Reform in Transitional Economies: The Case of the Former Yugoslav Republics
Mr. Jack Diamond
and
Mr. Duncan P Last
For the republics of the former Socialist Federal Republic of Yugoslavia (SFRY) as for many other transition economies, an important step in introducing a more market-oriented system was the restructuring of their budget systems. This paper reviews and evaluates the process of budget system reform during the transition period extending from the time they emerged from the collapse of the SFRY in 1989 until the end of 2002. For at least a decade of this period, the Fiscal Affairs Department of the IMF has been providing technical assistance (TA) to these countries to facilitate such reforms. Based on the material generated by this effort, the authors offer a review of the progress made and an assessment of the reform elements still to be completed. Given that the former Yugoslav republics all commenced the reform process with the same institutions, this paper offers a unique opportunity to analyze the critical elements in successful budget system reform. An attempt is made to explain the varying degrees of success experienced by different countries, and a reform agenda is suggested to guide future TA.
Keywords:
WP; submission system; government operation; banking arrangement; payment order; budget execution; cash management; government payment; MFERAC information system; Budget Reform; Yugoslavia; government institution; Budget planning and preparation; Budget execution and treasury management; Fiscal accounting and reporting; Central government spending; Global