The effect of monetary policy on gross domestic product in the Republic of Serbia

Abstract

The aim of this paper is to carry out an analysis of the impact of the monetary and credit policy on the real economic flows in the Republic of Serbia. In order to answer to the given goal, a correlation and regression analysis was performed for the period from 2004 to 2020. The results of this analysis have shown that there is a strong influence of the monetary and credit policy on the gross domestic product of the Republic of Serbia. Based on the results of the conducted regression analysis, it was found that in the Republic of Serbia, with the growth of the monetary aggregate M2 by 1%, gross domestic product grew by 0.691%. It was also found that the growth of approved long-term loans by 1% had a positive impact on the growth of gross domestic product by 0.425%. These values point to the great importance of the monetary and credit policy on economic growth in the Republic of Serbia and the need to attach great importance to monetary policy in the future period.