Abstract
The purpose of this research is to investigate the economic volatility of North Macedonia over the period 1998-2023. The study employs an Autoregressive Distributed Lag (ARDL) model that intends to assess the dynamics of economic volatility over economic growth. Economic volatility is measured as the standard deviation of GDP growth over a rolling window. The empirical results reveal that government budget balance, private sector credit, current account balance, money supply, and economic volatility significantly influence GDP growth, though with varying lag structures and directions. Notably, economic volatility stands out as a critical variable, while it may temporarily correspond with higher growth, its lagged effects are profoundly negative, showing the destabilizing consequences of persistent fluctuations. To mitigate volatility, the government needs to promote sound institutional frameworks, counter-cyclical policies, and structural reforms that enhance resistance to shocks.
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