Respond to Covid-19 challenges: Unconstrained growth and policy options

Abstract

In the first, empirical part of the paper, we have dealt with the previous recession episodes in Serbia in the 15-year interval from 2006 to 2020 and the direct impact of the Covid-19 crisis. We have compared the long-term and short-term trends and one-off Covid-19 impacts on the real and monetary economy, financial sector, and the rest of the world. Key lessons drawn from the previous crises are highly relevant today. The second part of the paper is analytical. For that purpose, we have updated our DSGE model with the data until the last quarter of 2020 and simulated nine alternative scenarios of fiscal, monetary, and industrial policies over the next five years. They showed remarkable results in some sectors, but created imbalances in others. Focusing on GDP growth in the post-Covid-19 period is misleading since the economy will never be the same. There is a need to choose an optimal mix of conventional policy measures and an industrial policy based on digitalisation and IT. The current Government policy of a huge fiscal deficit and rising public debt exposes the country to unbearable risk in the future.

Measuring the impact of the COVID-19 pandemic on the marketing industry of Serbia

“…Unlike the Eurozone, the Serbian economy has had low debt growth, with a well-capitalized banking system that is resistant to credit risk expansion (Nikolić & Filipović, 2021). However, Serbia's present government strategy of a large budget deficit and increasing public debt might put the country in danger in the future (Labus, 2021). Predicting Serbia's economic trajectory when the current outbreak stops would be exceedingly difficult.…”

Corporate Financial Policy as a Factor of Corporate Sustainability and Health during COVID-19 Pandemic Period

“…Governments that have implemented on-time economic measures to save the economy have faced a smaller decline in the volume of economic activity (Randelovic, 2021). However, the implementation of these measures is mainly accompanied by long-term unsustainable expansionary fiscal policy, which creates a growing budget deficit, which must be covered by either additional borrowing or increasing tax burden on households and the economy (Labus, 2021).…”