| Popis: |
The macroeconomic instability of a small open economy creates impediments for effective policy making and stabile economic growth of the country. Armenia also suffer from a problem of macroeconomic volatility. The article aims to analyze the causes of this fluctuations, for which three vector autoregressive models were constructed and estimated, which show the impact of partner countries’ macroeconomic shocks to inflation, output, and real effective exchange rate of Armenia. The article also refers to the possible channels through which these shocks can be transmitted to the domestic economy. The results show that the macroeconomic fluctuations of Armenia is more sensitive to the shocks of the Russian world oil prices, Federation’s output, the interest rate of the US Federal Reserve and dollar’s real effective exchange rate. |
