EVALUATING FISCAL MULTIPLIERS, PUBLIC INVESTMENT EFFICIENCY, AND GOVERNANCE IN NORTH MACEDONIA: EMPIRICAL EVIDENCE FROM A COINTEGRATED VECM FRAMEWORK

ELEZI, Shiret and AQIFI, Elsana (2026) EVALUATING FISCAL MULTIPLIERS, PUBLIC INVESTMENT EFFICIENCY, AND GOVERNANCE IN NORTH MACEDONIA: EMPIRICAL EVIDENCE FROM A COINTEGRATED VECM FRAMEWORK. In: INTERNATIONAL CONFERENCE “FROM RESEARCH TO APPLICATION”, 18-19 November, 2026.

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Abstract

This study investigates the dynamic long-run and short-run macroeconomic relationships between public capital expenditure, government consumption, institutional quality, and real GDP growth in the Republic of North Macedonia. Utilizing quarterly macroeconomic time-series data covering 2005–2025 sourced from the State Statistical Office (MAKSTAT), the National Bank of the Republic of North Macedonia (NBRNM), and the Ministry of Finance, the empirical analysis applies a Johansen Cointegration and Vector Error Correction Model (VECM) framework. Given North Macedonia's de facto fixed exchange rate regime (Macedonian Denar pegged to the Euro), fiscal policy serves as the primary instrument for macroeconomic stabilization and long-term structural growth. The long-run cointegration analysis demonstrates that public capital expenditures exert a statistically significant positive multiplier on real GDP (β=0.242,p<0.001), whereas non-capital public consumption exhibits a negative long-run impact (β=−0.118,p<0.01). The error correction dynamics indicate a quarterly speed of adjustment of −14.2% toward long-run equilibrium. Policy recommendations emphasize optimizing the Public Investment Management (PIM) framework, modernizing tax administration through continuous transaction controls (such as the e-Faktura system), and enforcing organic budget law rules to ensure public debt sustainability.

Item Type: Conference or Workshop Item (Paper)
Subjects: H Social Sciences > H Social Sciences (General)
Divisions: Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User: Unnamed user with email zshi@unite.edu.mk
Date Deposited: 10 Nov 2026 12:54
Last Modified: 10 Nov 2026 12:54
URI: http://eprints.unite.edu.mk/id/eprint/2709

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