STRUCTURAL AND CYCLICAL FACTORS OF SERBIA’S CURRENT ACCOUNT

Radovan Kovačević

Economic Annals, 2018, vol. 63, issue 217, 75 - 98

Abstract: This paper examines the impact of structural and cyclical factors on Serbia’s current account. We have applied several filters to turn off the long-term (structural) component and isolate the influence of cyclical factors. In this paper, we show that structural factors were more important determinants of the current account deficit in the full-time sample (1997- 2016), while cyclical factors showed a stronger impact in the post-crisis period when the deficit was reduced. Although they lost their intensity during the crisis and in the post-crisis period, the structural factors determine the trend of the current account balance in the long-term. For further improvement of the current account, measures to increase exports should be taken. The structural changes of production, the wider range of support for export financing to small and medium-sized enterprises, and the application of advanced technologies in manufacturing could help to reduce the trade deficit, making the current account deficit sustainable.

Keywords: Current account; cycles; structural factors; filtering methods; external debt; primary income (search for similar items in EconPapers)
JEL-codes: C01 F14 F41 (search for similar items in EconPapers)
Date: 2018
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