ABSTRACT
The theoretical and empirical evidence unanimously emphasize that fiscal policy measures and instruments are essential for economic policymakers that aim to achieve macroeconomic equilibrium and boost economic growth in both developed and developing economies. Taking into consideration this crucial role of the fiscal policy for the economic development, this paper examines the relationship between direct taxes, indirect taxes, labor force and economic growth for the Republic of North Macedonia. Given the absence of a universal framework for implementing fiscal policy measures, this research explores how these policies can be adapted and harmonized to promote economic stability. While the mechanisms and channels for achieving economic policy objectives may share similarities across different economies, their application must be customized to reflect each country’s unique macroeconomic conditions and aggregate trends. Employing regression analysis, including the Vector Error Correction Model (VECM) and co -integration methodology, the findings of this study highlight the critical role of fiscal policy in driving economic growth as well as reducing the unemployment rate in post transition economies such as the Republic of North Macedonia. This study also highlights the significance of strategically combining and aligning fiscal policy measures to meet the macroeconomic goals and as such it provides some recommendations for further development and changes in the fiscal policy and measures to be undertaken to ensure sustainable economic growth.
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