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Bulgaria’s Cyclical Position and Market (Dis)equilibria

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  • Ivan Todorov

Abstract

Bulgaria’s potential output and cyclical position for the period 2010-2015 are estimated by a methodology based on a two-factor Cobb-Douglas production function. An IS-LM model of the Bulgarian economy is developed to study the condition of the different types of markets (labor market, goods market and money market). During the entire period 2010-2015 Bulgaria‘s output remained below its potential, while unemployment was above its natural level. The goods market and the money market were not balanced but fluctuated around their equilibrium levels. The conclusions of the study are in agreement with the Keynesian views about the disequilibrium character of the economic system and about the necessity of an expansionistic macroeconomic policy to stabilize the economy at its potential level in case of a deflationary gap (as in Bulgaria during 2010-2015).

Suggested Citation

  • Ivan Todorov, 2017. "Bulgaria’s Cyclical Position and Market (Dis)equilibria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 30-64.
    • Handle: RePEc:bas:econst:y:2017:i:5:p:30-64
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    References listed on IDEAS

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    1. International Monetary Fund, 2010. "Bulgaria: Selected Issues," IMF Staff Country Reports 2010/159, International Monetary Fund.
    2. Garabed Minassian, 2008. "Is Bulgarian Economy Overheating?," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 21-46.
    3. Kaloyan Ganev, 2015. "A Small Model for Output Gap and Potential Growth Estimation. An Application to Bulgaria," Bulgarian Economic Papers bep-2015-04, Faculty of Economics and Business Administration, Sofia University St Kliment Ohridski - Bulgaria // Center for Economic Theories and Policies at Sofia University St Kliment Ohridski, revised Mar 2015.
    4. Stoyan Tanchev, 2016. "The Role of The Proportional Income Tax on Economic Growth of Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 66-77.
    5. World Bank, 2005. "Bulgaria : The Road to Successful EU integration, The Policy Agenda, A Country Economic Memorandum," World Bank Publications - Reports 8396, The World Bank Group.
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    7. Ivan Todorov, 2015. "Two Approaches for Evaluating the Aggregated Production Function of Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 67-81.
    8. Kaloyan Ganev, 2004. "Statistical estimates of the deviations from the macroeconomic potential. An application to the economy of Bulgaria," Macroeconomics 0409010, University Library of Munich, Germany.
    9. Ivan Todorov & Kalina Durova, 2016. "Economic Growth of Bulgaria and Its Determinants," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 3-35.
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    Cited by:

    1. Ivan Todorov & Aleksander Aleksandrov, 2018. "Chances for fiscal and monetary impact on Bulgaria’s economic cycle," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 83-92.
    2. Ani Stoykova & Mariya Paskaleva, 2018. "Correlation Dynamics between Southeast European Capital Markets," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 49-82.

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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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