Abstract
The Republic of Croatia, as a member of the European Union, is preparing for the adoption of the euro as a national currency and is currently in the so-called Eurozone’s “waiting room”. Usually, before the accession of some EU member state to the European Economic and Monetary Union (EMU), the analysis of the monetary transmission mechanism is performed in order to examine the compliance and readiness of the country for the common monetary policy. For the sake of the analysis, the vector autoregressive (VAR) model is applied. Results indicate relatively strong significance of the bank interest rate in terms of its impact on other variables, i.e., the real gross domestic product, prices, money supply and the real effective domestic exchange rate. As well, the results indicate that the bank interest rate is an exogenous variable that is not affected by other domestic variables.
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Acknowledgements
This paper is a result of the scientific research project “Impact of Monetary and Fiscal Policy on Financial Markets and Institutions” supported by the Faculty of Economics and Tourism “Dr. Mijo Mirković”, Juraj Dobrila University of Pula. Any opinions, findings and conclusions or recommendations expressed in this paper are those of the authors and do not necessarily reflect the views of the Faculty of Economics and Tourism “Dr. Mijo Mirković” Pula.
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Benazić, M., Učkar, D. (2021). Monetary Transmission in Croatia: A View from the Eurozone’s “Waiting Room”. In: Vidaković, N., Lovrinović, I. (eds) Macroeconomic Responses to the COVID-19 Pandemic. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-75444-0_8
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