INTERACTION BETWEEN INSTITUTIONAL PORTFOLIO INVESTORS AND FISCAL AND MONETARY POLICY

Until recently, there had been no research on interaction between institutional portfolio investors and fiscal and monetary policy in the Republic of Croatia, so many issues on their role in different fiscal and monetary policy conditions had been unresolved, as well as issues concerning fiscal and monetary administration due to the amendments in the investment funds’ policies.The research on interaction between portfolio investors with fiscal and monetary policy in this paper is mainly based on regression analysis. Due to the fact that regression model presents the simplifi ed image of the reality and that the model provides the answer to anticipate the level of relative variable for the assumed value of the independent variable, this research links and provides answers to the following issues: a) relation between the central State debt and total assets of the investment and pension funds and thus addressing the fiscal policy for the needs of anticipation of the public debt management concerning the sources of financing,b) relation between money supply (M1) and obligatory bank reserves, relation between the assets of the open-end investment funds and monetary mass (M1), and relation between interest rate for the long-term foreign currency deposit and assets of the open-end investment funds, which ensures the anticipation of the appearance of the portfolio investors in certain conditions of the monetary policy.