The paper examines how the implicit coordination mechanisms between the policymakers could help in overcoming negative macroeconomic consequences which are provoked by the problem of zero lower bound (ZLB) on the nominal interest rates. For the long period of time, before the global recession started, the ZLB problem was not found to be interesting for researchers. Immediately after the crisis outbreak, more attention was put on that problem within different approaches since conventional monetary policy faced substantial limitation in overcoming business cycles. Many authors have proposed new unconventional measures in both monetary policy and fiscal policy sphere. The theoretical approaches to the ZLB problem include many different aspects. In the paper we chose to use regime switching models adjusted to simulate occasionally binding constraints in order to investigate different scenarios within the New Keynesian framework. We found that coordination between more passive monetary policymaker and more active fiscal policymaker is crucial in the ZLB environment. Central bank has to follow monetary policy rule in which both inflation stabilization and output stabilization have certain positive weight. However, credible policy-making which is supported by the relevant institutions is a necessary precondition for implicit coordination, which substantially decrease the losses occurred as a consequence of ZLB on interest rates.

The paper deals with the extent to which the economic policy in Serbia has managed to respond to the economic problems imposed by the global economic crisis and how the restrictions in the form of political instability and political influence, also present before the crisis, influenced the economic policy formulated to combat the crisis. Globally, the economic crisis has resulted in the fact that, instead of the rules in economic policy making, with the key objective of maintaining price stability, now discretion and fiscal policies are being promoted, with the aim of overcoming the problem of unemployment. The significant use of discretion in the economic policy generally imposes the problem of the competence and possible political motives of economic policy makers. It is the limitations of underdeveloped institutions and a wrong model of growth that have contributed to the fact that the results of the economic policy in Serbia have not been significant. Serbia is facing the negative consequences of the measures implemented in the form of high budget deficits, public debt and inflation, while the effects on the economic activity and employment have failed, causing the present choice between rules and discretion.

The paper focuses the applicability of political cycles theories in specific circumstances of economies in transition which are at the same time the new democracies. Economic and political transition in these countries change both people’s and politicians’ preferences, institutions and generate specific politically motivated misuse of economic policymaking. Theories of political cycles in macroeconomics have been developed since 1970s, when the fact that policymakers could use economic policy as an efficient tool for increasing their chances for reelection became obvious. In countries with parliamentary democracies, incentives of policymakers to influence election results could be opportunistically motivated (opportunistic models) or ideologically motivated (partisan models). On the other side, voters could be naïve or rational, with different economic outcomes, as argued in extensive political cycles literature. The paper studies specific political motives of politicians in transition economies which are faced, especially in first fazes of transition with weak institutional mechanism and rules, and naïve voters. Consequently, opportunistic motives dominate ideological ones. The paper also focuses how the development of the institutional environment, especially in the context of international integration, such as accession to the European Union, reflects on the political business cycles in these countries.

The problems faced by the American economy in the second half of 2007, which intensified in 2008, have once again asked economic science, and even more so economic policy, questions relating to business cycles - the reasons for cyclical fluctuations, the character of business cycles and, naturally, economic policy measures that can be implemented to alleviate and overcome an economic recession. Since the 1970s, business cycle theories have been intensively developed - ranging from monetary theories, developed within monetarism and the first phase of New Classical Macroeconomics, to the real business cycle theory of New Classical Macroeconomics. Consequently, the triggers for the beginning of a cycle can be monetary (monetary theories) or real in the form of technological shocks (real business cycles). In essence economic policy conducted since the 1970s, has rejected the Keynesian explanations of the functioning of the economic system, and thus the policy of aggregate demand management. However, the measures that are now being implemented in the USA point to a return to Keynesianism. This refers, above all, to attempts to compensate for the inefficiency of monetary policy with fiscal expansion. All three psychological propensities (propensity to consume, propensity to invest and liquidity preference) in Keynes's theory and applied in Keynesian economic policy, are still the significant determinants of monetary and fiscal policies. The return to Keynesianism points to the depth of the crisis faced by the USA, but also confirms the vitality of Keynesian economics and affirms the view that - although Keynes wished to present his theory as being "general" - it is actually the theory of economic depression

This study deals with important issues related to the new political macroeconomics and its appliance to the economic movements in Serbia, which is a country of “new democracy” as well as with transition economy. In political macroeconomics, it is a known fact that the economic policy instruments can be used for political purposes - simulated improvement of economic indicators to win the elections. These options assume specific features in transition economies, such as the Serbian economy. The political instability in Serbia, reflected in frequent elections, as well as in the diversity in political and economic goals of the key political parties leading to increasing political uncertainty in both the pre-election and post-election periods, weakened the economic system. Simultaneously, using the economic policy for political purposes to support the “pro-democratic” and “pro-European” parties proved to be paradoxically justified