IMPACT OF ECONOMIC POLICY UNCERTAINTY ON ECONOMIC GROWTH IN THE REPUBLIC OF NORTH MACEDONIA
IMPACT OF ECONOMIC POLICY UNCERTAINTY ON ECONOMIC GROWTH IN THE REPUBLIC OF NORTH MACEDONIA

Summary/Abstract: This paper investigates the impact of economic policy uncertainty on economic growth in the Republic of North Macedonia, with particular emphasis on uncertainty originating from major external economies. Using annual time-series data and applying the Auto-Regressive Distributed Lag (ARDL) bounds testing approach, the study examines both short-run dynamics and long-run relationships between economic growth, economic policy uncertainty, and key macroeconomic determinants. The results confirm the existence of a stable long-run relationship among the variables. The findings indicate that capital accumulation and trade openness positively contribute to long-run economic growth, while inflation exerts a significant negative effect. Most importantly, economic policy uncertainty originating from the United States has a statistically significant and negative impact on economic growth in North Macedonia, whereas uncertainty originating from Germany shows a negative but statistically insignificant long-run effect. Results reveal relatively fast adjustment toward the long-run equilibrium. Overall, the results highlight the vulnerability of small and open economies to global uncertainty shocks and underscore the importance of macroeconomic stability and policy credibility for sustaining economic growth.

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