Application of the IS-MP-IA Model and the Taylor Rule to Croatia: Policy Implications for Economic Integration

Yu Hsing
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Yu Hsing: Southeastern Louisiana University, Postal: Charles Blackwell Endowed Professor of Economics, Head, Department of General, Business - SLU 10813, College of Business, Southeastern Louisiana University, Hammond, LA 70402 USA.

Journal of Economic Integration, 2006, vol. 21, 147-156

Abstract:

Applying the IS-MP-IA model and the Taylor rule, this study finds that a lower expected inflation rate, real appreciation, a lower federal funds rate, and more world output would help increase the Croatian output. The insignificance of government deficit spending suggests that the Ricardian-equivalence hypothesis may be applicable to Croatia. The conventional wisdom to pursue currency devaluation to stimulate the economy may not work for Croatia.

Keywords: IS-MP-IA; Taylor rule; deficit spending; devaluation; world interest rates (search for similar items in EconPapers)
JEL-codes: E52 E62 F41 (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0349

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