Phoenix Pharma DOO, Bosnia and Herzegovina Bosnia and Herzegovina
University of East Sarajevo, Faculity of Economics Pale, Bosnia and Herzegovina , Pale , Bosnia and Herzegovina
The subject and purpose of the research in this paper is based on the analysis of the influence of the central bank on public debt in the conditions of the currency board in Bosnia and Herzegovina. The structure of the work was set up through a dynamic analysis of the ratio of public debt variables, the supply of money, the state of the budget of the governments of Bosnia and Herzegovina, the current account and the nominal exchange rate. The research covers the period from 2000 to 2016. The research methodology is based on the use of empirical data and the application of the vector autoregresion model (VAR). On the basis of an analysis of the function of impulse and response, it is possible to indicate the reactions of the variable variables with one another. On the other hand, the decomposition of variance through the model proves the mutual variability and interaction of the variables for the observed period of research. The practical implications of the work are reflected in the answer to the extent to which monetary authorities, in the conditions of the currency board, due to the endogenous supply of money, contribute to the creation of a budget deficit and public debt.
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