LONG-RUN AND SHORT-RUN RELATIONSHIP BETWEEN AGRICULTURAL VALUE ADDED AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM SERBIA

Abstract

The aim of this paper is to empirically examine the short-run and long-run relationships between agricultural value added and real GDP growth in Serbia from 1995 to 2023, using the ARDL approach. The results of the empirical analysis based on the ARDL bounds testing procedure indicate the existence of cointegration between the examined variables. The findings reveal that, in the long run, there is a statistically significant and positive relationship between agricultural value added and economic growth, while the short-run relationship is also positive but of lower intensity. The negative and statistically significant error correction coefficient in the ECM model confirms that a substantial portion of short-run deviations in real GDP growth is corrected within one year, indicating the existence of a stable long-run equilibrium among the analyzed variables. These empirical results suggest that designing and implementing policies that stimulate agricultural production could make a significant contribution to achieving long-term sustainable economic growth in Serbia.