The Institute of Public Finance and the Croatian National Bank today presented the award-winning works of the Hanžeković Foundation for 2024 at the 64th CNB Economic Workshop.

Ozana Nadoveza, Senior Advisor at the Directorate for Economic Analyses of the Croatian National Bank and Associate Professor at the Department of Macroeconomics and Economic Development at the Faculty of Economics and Business, University of Zagreb, presented the winning paper in the regular category on the impact of public sector wages growth on inflation. After the pressures caused by rising energy and food prices subsided, wages increase became the primary risk for inflation. Given concerns that significant wages growth in the public sector during Croatia's 2024 election year could create additional inflationary pressures, the paper estimates the potential impact of public sector wages growth on overall inflation using BVAR models.

The analysis shows that the direct impact on inflation is negligible. However, depending on the assumptions, there is a certain indirect effect through increased aggregate demand and spillover to the private sector. Nonetheless, the indirect effect remains relatively low, despite the double-digit growth in public sector wages, which is assumed to spill over into aggregate demand and private sector wages.

Noa Hinger and Lucija Rašić, students at the Faculty of Economics and Business, University of Zagreb, presented their awarded paper in the student category, analysing the impact of government bonds on deposit interest rates in Croatia, comparing their effect with the influence of the European Central Bank (ECB). The issuance of government bonds in February 2023 provided citizens with a secure investment opportunity, especially after several years of low interest rates in Europe.

By combining principal component analysis and regression analysis, the authors found that government bonds have a limited effect on interest rates, while the effect of the ECB is much more significant. The results suggest a complex dynamic between fiscal and monetary policy, highlighting proactive government measures for stimulating investment and the development of the Croatian capital market.

The presentation was moderated by Katarina Ott, Manager of the Hanžeković Foundation, and Maroje Lang, Vice Governor of the Croatian National Bank.

The awarded papers were published in the Public Sector Economics, journal of the Institute of Public Finance. The competition for the 2025 year is open, and more information is available on the Foundation's website.