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27.06.2008.
Of the positive macroeconomic movements in Q1, the high economic growth, acceleration of exports, sustainable real growth of wages – somewhat lower than the growth of economic activity – and moderately restrictive monetary policy, can be singled out. Besides the high inflation, on the negative side were the current account deficit, sluggish activity on the financial markets and the major drop in the Belgrade Stock Exchange indices... 28.03.2008.
The start of 2008 augurs a period of political instability for Serbia, which could negatively impact economic movements
and policies. Relations with the EU and USA have deteriorated over their recognition of Kosovo's declaration of independence,
and the process of integration with the EU has been stalled. The governing coalition appears to be weak, which makes it
vulnerable to populist pressures in economic policy. Elections are coming up, local in May and, possibly, parliamentary
later in the year, and this too creates a climate conducive to economic populism. All this could significantly aggravate
the economic situation in the country... 12.12.2007.
Section Spotlight on brings important macroeconomic issues: (1) Causes and consequences of the current account deficits
in Serbia; (2) Opportuneness of introducing a global income tax system, and (3) Monetary policy – channels of transmission
to prices: a year of inflation targeting, where we analyze the first experiences of the NBS in targeting inflation and the
channels through which this is done... 26.09.2007.
The topics under the spotlight in this QM deal with the segment of structural reform in Serbia where the common thread
is regulation. Also important and topical are the issues of the privatization and restructuring of big public enterprises,
a sounder financial market (how the legislation regulating the financial market is applied), and promoting risk control in
banking operations in keeping with international standards (implementing the Basel 2 standards)... Quarterly Monitor No. 8 - Spotlight on 1 Is Energy Efficiency Attainable without Disproportionate Costs for Serbia? Potential Gains from the Kyoto Protocol Sonja Avlijaš
Serbia’s economic decision-makers seem to be unaware of the economic benefits the Kyoto Protocol can bring to the country, and while most European governments are making global warming their top priority, Serbia has not even signed the Protocol. Being classified as a developing country under the Protocol, Serbia is missing out on the opportunity to participate in the international market for carbon trade, and through being a net seller of carbon credits, finance improvements in the country’s energy efficiency, that way boosting its international competitiveness The paper uncovers the mechanisms through which Serbia can benefit from the ratification of the Kyoto Protocol and estimates these benefits in a quantitative fashion.. An annex to this paper will be posted soon. Quarterly Monitor No. 8 - Spotlight on 2 The Competition Commission: One Year On Zoran Skopljak The Competition Commission was set up just over year ago under the Competition Protection Act, which was enacted
almost two years ago. This paper is a commentary on the Act and the effects of its application. Adoption of this law is, in
principle, a precondition for effectively and directly tackling monopolies, and also meets the EU’s requirement for the
harmonization of legislation as part of the accession process. However, the Commission’s work over the past year and an
analysis of the Act itself, reveal major shortcomings. On the one hand, the Commission lacks sufficient authority and, on
the other, is burdened with numerous petty or less important cases, which prevents it from devoting itself full time to
cartels and abuses of dominant position. We therefore propose that the Commission be granted wider powers in pronouncing
sanctions for violations of the Act. Also, requirements for reporting concentrations should be changed, and the amounts
increased. This would create conditions for the Commission to focus on cases of real importance for ensuring free
competition... 15.06.2007.
Production grew at a very high rate in Q1: GDP growth was around 9%, or 10% when the agriculture is excluded, and the foreign trade deficit is even higher than the GDP growth: we are currently spending 22% more than we produce. The average gross wage rose as well, by 19% in real terms compared to Q1 last year, while net wages increased much more - by 24% in real terms. All this indicates: while fiscal policy was unintentionally tightened, the easing of monetary policy was deliberate. It has been announced that the new budget, which is to be adopted by late June, will be balanced, i.e. with a small deficit. This means that the analytically consolidated budget viewed from the aspect of aggregate demand (FREN’s definition) will achieve a deficit of up to 2% of GDP. It ensues that the government will not help to cut back the aggregate demand and huge foreign trade deficit.  23.03.2007.
29.01.2006 It is our pleasure to inform you that on January 25, 2007. Dr Mihail Arandarenko assumed the position of Chairman of the Board of Directors of the Foundation for the Advancement of Economics (FREN). The former Chairman, Dr Kori Udovicki, will be taking over the position of Assistant Secretary-General and Regional Bureau Director for Europe and CIS at UNDP in New York starting February 1st, 2007. FREN's Board of Directors, which consists of representatives of FREN's founders (the Faculty of Economics, University of Belgrade and the Centre for Advanced Economic Studies) decided unanimously on the appointment of professor Arandarenko, noticing with satisfaction that he possesses all the qualities necessary to sustain and advance FREN's quality of work and presence on Serbia's economic scene. The Board of Directors expresses their warm gratitude to Dr Kori Udovicki for her key role in establishing FREN and for the incredible effort she invested in its development. Mihail Arandarenko, Ph.D. in Economics from Belgrade University (1998). Associate professor of Labor Economics, Faculty of Economics, University of Belgrade. Research areas: labor markets, employment programs, industrial relations and social policy. 2004- Member of Employment Council of the Government of Serbia. 2002-4 Director of Policy and Legal Advice Center, Belgrade - an EU project. 2000-1 Research Fellow at Central European University's Center for Policy Studies, Budapest. 1999-2000 Fellow at Collegium Budapest - Institute for Advanced Study. 1999-2002 Research Affiliate of the Social Science Research Center, Berlin. Extensive consultancy experience (UNDP, EAR, World Bank, ILO, USAID, ETF). Published several books and numerous articles on labor market, social policy and transition in Serbia.
15.01.2006
Kori Udovički, Foundation for the Advancement of Economics Vuk Đoković, Foundation for the Advancement of Economics
A new stage in Serbia’s monetary policy opened in June 2006, its most visible manifestation being the strong, and it is now clear, quite durable, appreciation of the dinar. Many observers were, and still are, doubtful and asked FREN if it was "real". This article therefore sets out in detail the developments on the foreign exchange market since 2002, and shows that the recent ones cannot be ascribed to NBS interventions aimed at strengthening the dinar.
It is, in fact, a watershed that resulted from the NBS’ 6-quarter long efforts to rein in, with market instruments, the burgeoning credit growth in the banking sector.
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QM5 - 08.11.2006 Laurian Lungu, Group of Applied Economics (GEA), Bucharest, Romania
Following in the footsteps of other Eastern European countries, Romania has recently adopted inflation targeting (IT) as an operating framework for monetary policy. This article highlights some of the challenges which the Romanian central bank might face in implementing IT. It also discusses several issues, relevant to the transition period between the monetary policy regimes.
The economies in transition, and in particular those who want to adopt the euro in the near future, are more prone to be confronted with the issue of multiple objectives. This raises the question whether a European Central Bank type policy with less stringent requirements, based on a strong commitment to price stability, would have been a more appropriate choice.
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QM5 - 08.11.2006 Dragana Cvijanović, Foundation for the Advancement of Economics
The most active and, according to many, most attractive investment market in Serbia – real estate - is still pretty much an unknown. In spite of efforts by distinguished economists to shed some light on important principles and institutional issues, there has been no indepth analysis of this market so far.
By analyzing the database of prices and characteristics of around 40,000 housing units in Belgrade, this article will endeavor to arrive at the facts on the conditions and movements in Serbia’s real estate market. Unfortunately, the database covers a relatively short period (2005 and the first half of 2006).
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16.10.2006. The Foundation for the Advancement of Economics (FREN) has started the survey of services sector enterprises operating in Belgrade. The survey is being conducted on a sample of 300 business units from services sector, focusing on the provision of knowledge based, ICT and media services. First results of the research will be presented on 13th and 14th of November 2006, at Venice Architecture Biennale Cities, architecture and society, as a part of the Project Belgrade presentation.
This research is supported by "Hypo Alpe-Adria-Leasing" (sponsor), "Coca Cola HBC", "Ernst & Young", "Hypo Alpe-Adria-Bank" (research partners).
16.10.2006
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Q2 2007 was more important for what it sowed than for what actually went on in the economy.
This was a quarter when the 2007 Budget was passed, with a delay because of the formation of the new government.
Immediately after that, a government Memorandum on the Budget, Economic and Fiscal Policy in 2008 was adopted.
The 2007 Budget envisages a major rise in wages and public investments until the end of the year. 
As predicted in the previous issue of QM, the internal imbalance – inflation – has shifted to external imbalance – a large foreign trade deficit. Inflation was very low in Q1, with production, wages and credit growing vigorously; the market is well supplied with widely available imported goods. The big fiscal feast in late 2006 triggered the surge in spending and production which, however, resulted in a huge foreign trade deficit. In other words, the first quarter of 2007 was marked by the expansion of aggregate demand, which led to a high growth of production as well as a record foreign trade deficit and imports, while inflation was kept under control. The growth of demand was generated by the growth of wages, the effects of the fiscal expansion in late 2006, and the growth of credit.
The main challenge to economic policy in 2006 was to halt inflation, which had run out of control in the preceding year. The Serbian economy scored good results in 2006 with respect to economic growth, reining in inflation and solid growth of exports. On the reverse side of the 2006 coin were the major foreign trade and current account deficits, a considerable appreciation of the dinar, and the high rise in wages, which exceeded the growth of productivity, as well as the fiscal expansion in the second semester. Fiscal policy in 2007 must be revised in order that a balanced budget could be achieved. This would leave enough room for the growth of private investments and spending without triggering inflation and worsening the foreign trade deficit. The NBS could then continue lowering the interest rate, which would do away with pressures for appreciation of the dinar, and it could even depreciate mildly and enhance the competiveness of the economy. Such a combination of fiscal and monetary policy would be sustainable over the medium term and would be a good basis for economic growth.
The forecasts we made at the end of last year proved to have been right: the Serbian economy did make great strides on a wide front in 2006. We hope that our forecasts, or more accurately, anxieties, for 2007 will be proved wrong. Better said, they need not materialize. With a little luck, the probable scenario could be avoided if the upcoming elections produce clear results and a courageous economic team in the Serbian Government; for economic stability will in great measure hinge on the fiscal policy of the new Government. 
Macroeconomic policy moved toward targeted inflation while fiscal policy went on the election trail this summer. Inflation did not gather speed thanks to administrative price controls as well as a combination of circumspect fiscal and monetary policy measures. The dimensions of the fiscal expansion will depend largely on the tradeoff, as perceived by policymakers, between the election gain and the price - to be paid largely after the elections - of the policy mix. The NBS has not yet publicly and clearly committed itself to an inflation target. But for the first time this summer it acted as if it was ready to pay whatever price necessary to reduce the inflationary growth of credit. Indeed, it was so tough that the growth of short-term credit to companies in July was negative. Over the longer term, pre-election policies need not be too costly. Once they take office, new governments as a rule quickly tighten fiscal policy, scale back the macroeconomic framework to a sustainable level, and allow the economy to grow, albeit somewhat more slowly. Will this be the case with our domestic electoral fiscal cycle?