Balance of Payments Deficit and Currency Board Arrangement Sustainability in Bosnia and Herzegovina

Kurteš Siniša (), Amidžić Srđan () and Rajčević Perica ()
Additional contact information
Kurteš Siniša: University of Banja Luka, Faculty of Economics, Bosnia and Herzegovina
Amidžić Srđan: University of Banja Luka, Faculty of Economics, Bosnia and Herzegovina
Rajčević Perica: Vodovod a.d. Banja Luka, Bosnia and Herzegovina

Zagreb International Review of Economics and Business, 2020, vol. 23, issue s1, 43-56

Abstract: Constant current account deficit in Bosnia and Herzegovina results from a large foreign trade imbalance, which in turn is a consequence of uncompetitiveness of the economy in the global market. The current account deficit is mainly financed by foreign remittances, foreign aid, and least of all by foreign investment. Lately, the outflow of the active, working population has been decreasing the labor force (especially the qualified and highly educated employees), as well as the domestic demand, which will exert further pressure on the balance of payments account. On the other hand, monetary policy is operating under the principles of currency board, i.e. applying a firm exchange rate, so the question arises whether and to what extent it is sustainable, under the conditions of a high current account deficit. The purpose of this paper is precisely to examine the relation between the deficit of balance of payments and the sustainability of the currency board arrangement in Bosnia and Herzegovina, under such conditions.

Keywords: current account; currency board; balance of payments deficit (search for similar items in EconPapers)
JEL-codes: A10 E24 E42 F43 (search for similar items in EconPapers)
Date: 2020
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.2478/zireb-2020-0022 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vrs:zirebs:v:23:y:2020:i:s1:p:43-56:n:1004

DOI: 10.2478/zireb-2020-0022

Access Statistics for this article

Zagreb International Review of Economics and Business is currently edited by Jurica Šimurina

More articles in Zagreb International Review of Economics and Business from Sciendo
Bibliographic data for series maintained by Peter Golla ().