Balance of Payments Deficit and Currency Board Arrangement Sustainability in Bosnia and Herzegovina
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 fo...
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Online Access: | https://doi.org/10.2478/zireb-2020-0022 |
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doaj-c2936562d1824036bacbeb9c038fae8f2021-09-05T21:25:41ZengSciendoZagreb International Review of Economics and Business1849-11622020-12-0123s1435610.2478/zireb-2020-0022Balance of Payments Deficit and Currency Board Arrangement Sustainability in Bosnia and HerzegovinaKurteš Siniša0Amidžić Srđan1Rajčević Perica2University of Banja Luka, Faculty of Economics, Bosnia and HerzegovinaUniversity of Banja Luka, Faculty of Economics, Bosnia and HerzegovinaVodovod a.d. Banja Luka, Bosnia and HerzegovinaConstant 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.https://doi.org/10.2478/zireb-2020-0022current accountcurrency boardbalance of payments deficita10e24e42f43 |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Kurteš Siniša Amidžić Srđan Rajčević Perica |
spellingShingle |
Kurteš Siniša Amidžić Srđan Rajčević Perica Balance of Payments Deficit and Currency Board Arrangement Sustainability in Bosnia and Herzegovina Zagreb International Review of Economics and Business current account currency board balance of payments deficit a10 e24 e42 f43 |
author_facet |
Kurteš Siniša Amidžić Srđan Rajčević Perica |
author_sort |
Kurteš Siniša |
title |
Balance of Payments Deficit and Currency Board Arrangement Sustainability in Bosnia and Herzegovina |
title_short |
Balance of Payments Deficit and Currency Board Arrangement Sustainability in Bosnia and Herzegovina |
title_full |
Balance of Payments Deficit and Currency Board Arrangement Sustainability in Bosnia and Herzegovina |
title_fullStr |
Balance of Payments Deficit and Currency Board Arrangement Sustainability in Bosnia and Herzegovina |
title_full_unstemmed |
Balance of Payments Deficit and Currency Board Arrangement Sustainability in Bosnia and Herzegovina |
title_sort |
balance of payments deficit and currency board arrangement sustainability in bosnia and herzegovina |
publisher |
Sciendo |
series |
Zagreb International Review of Economics and Business |
issn |
1849-1162 |
publishDate |
2020-12-01 |
description |
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. |
topic |
current account currency board balance of payments deficit a10 e24 e42 f43 |
url |
https://doi.org/10.2478/zireb-2020-0022 |
work_keys_str_mv |
AT kurtessinisa balanceofpaymentsdeficitandcurrencyboardarrangementsustainabilityinbosniaandherzegovina AT amidzicsrđan balanceofpaymentsdeficitandcurrencyboardarrangementsustainabilityinbosniaandherzegovina AT rajcevicperica balanceofpaymentsdeficitandcurrencyboardarrangementsustainabilityinbosniaandherzegovina |
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