DETERMINANTS OF NOMINAL GROSS DOMESTIC PRODUCT GROWTH IN THE WESTERN BALKAN COUNTRIES: A PANEL ANALYSIS FOR THE PERIOD 2008–2024

Miloš Golubović; Gordan Janković

doi:10.5937/ekonsig2601001G

Authors

Miloš Golubović Innovation Center, University of Niš, Serbia Author https://orcid.org/0000-0001-7783-719X
Gordan Janković Innovation Center, University of Niš, Serbia Author https://orcid.org/0000-0003-3172-6990

DOI:

https://doi.org/10.5937/ekonsig2601001G

Keywords:

nominal GDP growth, Western Balkan countries, panel analysis, fiscal policy, government expenditures, real GDP growth, economic openness, public debt, inflation, Pooled OLS model

Abstract

The paper analyzes the determinants of nominal gross domestic product growth in the Western Balkan countries during the period 2008– 2024. The aim of the research is to identify the relative importance of fiscal, real, price-related, and external factors in explaining nominal economic dynamics. The empirical analysis is based on a panel sample comprising Serbia, Montenegro, North Macedonia, Bosnia and Herzegovina, and Albania, using a Pooled OLS model with robust standard errors. The results indicate that the key drivers of nominal growth are the growth of government expenditures, increased economic openness, and real GDP growth, with real growth representing the most stable and statistically significant factor. Inflation and public debt growth did not show a statistically significant impact. The findings suggest that nominal growth in the observed economies is predominantly driven by real economic activity and fiscal expansion, with foreign trade also playing an important role.

Downloads

Download data is not yet available.

References

Aghion, P., Akcigit, U., & Howitt, P. (2015). The Schumpeterian Growth Paradigm. Annual Review of Economics.Vol. 7, pp. 557-575. Available at: - https://www.annualreviews.org /content/journals/10.1146/annu rev-economics-080614-115412

Blanchard, O., & Perotti, R. (2002). An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output. The Quarterly Journal of Economics. Vol. 117, No. 4, pp. 1329-1368. Oxford University Press. Available at: https://www.jstor.org /stable/4132480 Blanchard, O. (2019). Public Debt and Low Interest Rates. American Economic Review, Vol. 109, No. 4, pp. 1197–1229.

Égert, B. (2015). Public debt, economic growth and nonlinear effects: Myth or reality? Journal of Macroeconomics.Vol. 43(C), pp. 226-238. Available at: https:// ideas.repecorg/a/eee/jmacro/ v43y2015icp226-238.html

Escolano, J. (2010). A Practical Guide to Public Debt Dynamics, Fiscal Sustainability, and Cyclical Adjustment of Budgetary Aggregates. International Monetary Fund, Washington, D.C.

Herndon, T., Ash, M., & Pollin, R. (2014). Does high public debt consistently stifle economic growth? A critique of Reinhart and Rogoff.Cambridge Journal of Economics.Vol. 38, Issue 2, pp. 257–279. Available at: https://academic.oup.com/cje/ar ticle-abstract/38/2/257/1714018

Ilzetzki, E., Mendoza, E. G., & Végh, C. A. (2012).How big (small?) are fiscal multipliers? Journal of Monetary Economics. Working Paper 16479. NATIONAL BUREAU OF ECONOMIC RESEARCH. Available at: https:/ /www.nber.org/system/files/wo rking_papers/w16479/w16479. pdf

Khan, M. S., & Senhadji, A. S. (2001).Threshold Effects in the Relationship Between Inflation and Growth. A journal of the IMF. Vol. 48, No. 1. IMF Staff Papers. Available at: https:// www.imf.org/external/pubs/ft/s taffp/2001/01a/khan.htm

Krugman, P. (2012). End This Depression Now! New York: W. W. Norton & Company.

Mankiw, N. G., Romer, D., & Weil, D. N. (1992). A contribution to the empirics of economic growth. Working Paper 3541. NATIONAL BUREAU OF ECONOMIC RESEARCH. Available at: https://www.nber.org/system/fi les/working_papers/w3541/w35 41.pdf

Milesi-Ferretti, G. M. (2000). Good, Bad or Ugly? On the Effects of Fiscal Rules with Creative Accounting. IMF Working Paper, International Monetary Fund, Washington, D.C.

OECD, Nominal Gross Domestic Product (GDP). Available at: https://www.oecd.org/en/data/i ndicators/nominal-grossdomestic-product-gdp.html

Panizza, U., & Presbitero, A. F. (2014). Public debt and economic growth: Is there a causal effect? Journal of Macroeconomics. Vol. 41(C), pp. 21-41. Available at: https://ideas. repec.org/a/eee/jmacro/v41y201 4icp21-41.html

Reinhart, C. M., & Rogoff, K. S. (2010). Growth in a Time of Debt. American Economic Review. Vol. 100, No. 2, pp. 573- 578. Available at: https:// www.aeaweb.org/articles?id=1 0.1257/aer.100.2.573

Rodriguez, F., & Rodrik, D. (2000). Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence. NBER Macroeconomics Annual. Vol. 15. UNIVERSITY OF MARYLAND AND HARVARD UNIVERSIT. Available at: https://www.journals.uchicago. edu/doi/abs/10.1086/654419

Rousseau, P. L., & Wachtel, P. (2002). Inflation thresholds and the finance–growth nexus. Journal of International Money and Finance. Vol 21, Issue 6, pp. 777-793. Available at: https://www.sciencedirect.com/ science/article/abs/pii/S026156 0602000220

Von Hagen, J., & Wolff, G. B. (2006). What Do Deficits Tell Us About Debt? Empirical Evidence on Creative Accounting with Fiscal Rules in the EU. Journal of Banking & Finance, Vol. 30, No. 12, pp. 3259–3279.

Wacziarg, R., & Welch, K. H. (2003). Trade liberalization and growth: New evidence.Working Paper 10152.World Bank Economic Review. NATIONAL BUREAU OF ECONOMIC RESEARCH. Available at: https:/ /www.nber.org/system/files/wo rking_papers/w10152/w10152. pdf

Wooldridge, J. M. (2010). Econometric analysis of cross section and panel data (2nd ed.). MIT Press. Cambridge, Massachusetts. London, England. Available at: https://ipcid.org/ evaluation/apoio/Wooldridge% 20-%20Cross-section%20and% 20Panel%20Data.pdf

World Bank. (2025). Strengthening Fiscal Governance in the Western Balkans. World Bank Group, Washington, D.C. Available at: https://www.worldbank.org/en /region/eca/brief/strengthening-fiscal-governance-in-thewestern-balkans