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Abstract

The Social Accounting Matrix (SAM), together with the SESAME approach, proved highly useful in providing the basis for in-depth analyses of all the socio-economic flows in the developed economies. The aim of this paper, after initial explanation of the theoretical foundations of these methods for the development analysis, is to contribute to raising the awareness of the urgent necessity for developing and implementing these methodological approaches in the Republic of Macedonia. Special attention is paid to the analysis of the current situation related to the readiness of the national statistical system to provide all the necessary statistical data and logistical support for a more efficient preparation and implementation of these methodological approaches in the national economy. The paper analyses in detail the data describing particularly important aspects of the position of workers on the labour market aimed to be used as a basis for the SESAME approach. A comparative analysis with reference to the EU countries has been performed. The paper concludes by presenting practical recommendations which should, in our opinion, lead to preparation and implementation of the SAM and its extension (SESAME) in the Republic of Macedonia. The named should be used for the successful decision-making process related to creation and implementation of efficient macroeconomic and development policies in the country.Keywords: Macedonia, macroeconomic policies, SESAME, Social Accounting Matrix, sustainable development. Acknowledgments: We dedicate this paper to our families, for their continuous support and understanding.

Government consumption plays an important role for stability of the national economy, especially in periods of economic crisis. However, rapidly growing public debt is a concerning issue nowadays, since it might jeopardize economic growth perspectives. Economic theory suggests that public debt has non-linear impact on economic growth in a form of inverted U-shape. In other words, it is believed that after a certain threshold, public debt will have negative impact on economic growth. Given that such threshold varies significantly across countries, the aim of this paper is to calculate the turning point of the public debt impact in the Republic of North Macedonia. For this purpose, we use non-linear multiple regression model for real GDP growth rate as dependent variable, general government public debt-to-GDP ratio (in nominal and squared terms) as key independent variable, as well as several other controlling variables. Since theory also suggests reverse causality between economic growth and public debt, we use three different estimation techniques (Ordinary Least Squares, Two-Stages Least Squares, and Generalized Method of Moments) to deal with potential endogeneity, as well as to cross-validate the results. Our results show that general government debt in the Republic of North Macedonia positively affects economic growth until it reaches around 30% of GDP, whereas further indebtedness after that turning point will most likely have negative impact. Given that current debt level is slightly above 40% (10 percentage points higher than the turning point), whereby due to the COVID-19 crisis it is expected to grow even more in the upcoming years, the need of urgent fiscal consolidation inevitably arises. In this regards, deeper and more comprehensive analysis is needed in order to identify adequate channels for its efficient and effective implementation.

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