Smoking is an endemic problem in Bosnia & Herzegovina (BiH), and BiH is among the top 10 countries in the world for cigarettes consumption (World Atlas, 2018). The state excise policy is one of the main available tool for reducing smoking prevalence because the cigarette prices are under direct impact of this policy. The specific excise on cigarettes introduced in BiH in 2009 and have increased every year so it was the main driver of cigarettes price growth. In order to determine effect of increase in cigarette prices, and thus effect of excise policy on demand for cigarettes in BIH, in this paper we estimate price elasticity of demand for cigarettes. We follow Deaton (1988) demand model and apply it on micro data, obtained from the Household Budget Surveys in BiH in 2011 and 2015. Our results show that the price elasticity coefficient is statistically significant and amounts to -0.65. This means that if cigarette prices in BIH increase by 10%, the demand for cigarettes, among smokers of cigarettes, will decrease by 6.5% i.e. continuous increasing in specific excise in BiH can be efficient measure for reducing smoking prevalence in BiH.
The global economic crisis has not spared the countries of the Western Balkans. The ensuing recession, characterized by a decline in economic activity, a decline in consumption and an increase in unemployment, went hand in hand with drops in public revenues. This in turn resulted in budget imbalances that manifested in structural budget deficits and higher public debt. Fiscal consolidation was deemed necessary across the board. In this process, certain fiscal policy elements varied among countries. The structure of public revenues and public expenditures changed. The question is whether the fiscal consolidation was successful and to what extent. Dynamic panel analysis using PMG estimator in six Western Balkan Countries for the period 2004-2016 has shown that fiscal consolidation has positive impact on economic growth in this region. So, Western Balkan Countries have to conduct responsible public finances in order to encourage economic growth.
Economic theory suggests that free capital flows increase the efficiency of the resource allocation and stimulate economic growth. Foreign direct investment (FDI) is seen as a remedy for all economic problems in countries that do not have a sufficient level of accumulation to start economic growth. According to economic criteria of Copenhagen, countries that are in the process of European integration should have a functioning market economy able to cope with competition and market forces within the European Union. The greatest expectations regarding the development of a competitive economy in the Southeast European (SEE) countries are precisely related to attraction and exploitation of the positive effects of FDI. This paper explores the impact of FDI on economic growth of the Central European (CE) countries and the SEE countries. The experience of the CE countries can be beneficial for the SEE countries following them in the process of European integration. The results show that FDI flows to the SEE region are significantly lower than to the CE region. Panel analysis has shown a statistically significant impact of FDI on economic growth inboth regions. However, in absolute terms the impact of FDI on economic growth inthe SEE region is almost negligible.
Summаry: Economic theory suggests that free capital flows increase the efficiency of the resource allocation, and stimulate economic growth. Foreign direct investment (FDI) is seen as a kind of cure for all economic problems in countries that do not have a sufficient level of accumulation for starting economic growth. In this paper we will investigate the impact of FDI on economic growth in Commonwealth of Independent States (Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russian Federation, Tajikistan and Ukraine) for the 2000-2015 period. Our assumption is that increase in FDI inflow will have positive impact on economic growth. The analyisis was carried out using the ARDL (Pooled Mean Group/AR Distributed Lag Models). This model is particularly convenient in a situation where all variables are stationary at different levels. The results shows strong and positive impact of FDI on economic growth.
Abstract One of the key goals of the economic policy makers of every country is to achieve internal and external balance. An unavoidable segment of the analysis concerning the achievement of internal and external balance is certainly the influence of the exchange rate regime applied in a country. European transition countries, despite their similar initial problems and final objectives, applied different exchange rate regimes adapted to the economic circumstances and needs of the country. The paper aims to examine and demonstrate the impact of the applied exchange rate regime on the internal balance of the transition countries. The research encompasses 10 representative transition countries, in the period from 2000-2014. The results of the research, from the aspect of internal balance, confirmed the justification of the application of the floating exchange rate regime in more developed, but not in less-developed, European transition countries. The application of floating exchange rate regimes in less-developed transition countries is associated with a considerably higher average inflation rate, which may be explained by the higher import dependence of lessdeveloped countries and by the consequent transfer of depreciation to price growth.
Background Tobacco smoking remains a significant public health concern worldwide. With more than 15 percent of youth being current smokers according to the 2018 and 2019 Global Youth Tobacco Surveys, Bosnia and Herzegovina stands out with one of the highest youth smoking rates in Europe. This high youth smoking rate necessitates an in-depth investigation into the factors influencing smoking initiation among youth.
Background Tobacco tax policy in Bosnia and Herzegovina currently assumes a gradual annual increase in the specific excise tax on cigarettes (0.15 BAM per year per pack). However, since 2019 policy makers in Bosnia and Herzegovina have frozen the increase in specific excise taxes. The Indirect Taxation Authority (ITA) increased the minimum excise in 2023 to 3.35 Bosnia-Herzegovina convertible marks (BAM) per pack, which is a change of 0.02 BAM compared to 2022. This research examines the effects of the increase in cigarette prices on government revenues from excise and indirect taxes, as well as the health impacts of tobacco tax increases. Methods Based on the data on legal cigarette sales and the tax structure, we employ tobacco tax simulation modeling to estimate revenue change and the impact on public health. The baseline year for our analysis is 2023, and we conduct forecasts for the period of 2024 – 2025. The estimations of the impact of the proposed increased excise on government revenues are done by applying different scenarios regarding price and income elasticities on different price segments. We analyze the impact of the increased prices on public health through the decrease in prevalence and number of smokers.
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