Relationship Between Foreign Direct Investment Inflow and Unemployment in the Slovak Republic The inflow of foreign direct investment (FDI) is linked to several positive effects, which result in growing gross domestic product (GDP) and reduced unemployment rate in the host country. The level of GDP and the unemployment rate determine the FDI inflow, but contrariwise, FDI inflow has an impact on these variables. In the paper, we investigate which of these variables is the impulse and which is consequently determined by the impulse variable. The objective of the paper is to examine the length of the FDI effect in a host economy as well as the impact of FDI inflow on the unemployment rate using vector autoregression and impulse-reaction functions. Based on results of the Granger causality, we analyse linkages between FDI inflow, unemployment rate and GDP growth in the Slovak Republic in the period 1995-2018. The results show that the impulse comes from the unemployment rate, which consequently affects the FDI inflow. However, the length of this effect is very short.

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The existence of the cyclical development of the economy and searching for the effective fiscal and monetary policy as a tool to mitigate cyclical fluctuations will be for a long time a subject of many professional discussions. In particular, the crisis processes in the 21 st century meant a renewal of the debate between Keynesian and monetarist oriented economists. The aim of the article is to compare and evaluate different approaches to the effective application of fiscal and monetary policy instruments and the possibility of their practical application. Many economists have come to the conclusion that the implementation of monetary policy leads to the more effective allocation of production resources as in the case of fiscal expansion. It is obvious that even in the future there will be controversy about whether the cause of cyclical fluctuations is incorrectly implemented economic policy or the failure of economic and political institutions.

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