THE TRANSMISSION MECHANISM AND CONSEQUENCES FROM THE GLOBAL ECONOMIC CRISIS FOR THE MACEDONIAN ECONOMY

Abstract

The global economic crisis had a a significant impact on many economies in the world, especially on the small and open economies where the transmission channels of the crisis had their own specifics. Therefore in this paper we try to analyze the transmission mechanism of the global crisis in a small and open economy - the Republic of Macedonia, which reveals some key points in which this group of countries is extremely vulnerable in terms of global distortions. The main transmission channels determined by the specific features of theMacedonian small and open economy are primarily the fall in global economic activity (especially the fall in the economic activity of our main trade partners); the disturbance in international capital markets, the loss of investors’ confidence in markets and their risk aversion. The paper elaborates the main transmission channels, as well as their effects on almost every segment of the Macedonian economy: the real sector, financial sector, fiscal sector and the external sector.