scholarly journals Monetary and exchange rate regimes changes: The cases of Poland, Czech Republic, Slovakia and Republic of Serbia

2009 ◽  
Vol 56 (2) ◽  
pp. 199-226 ◽  
Author(s):  
Kosta Josifidis ◽  
Jean-Pierre Allegret ◽  
Emilija Beker-Pucar
Keyword(s):  
Exchange Rate ◽  
Czech Republic ◽  
Interest Rate ◽  
Transition Economies ◽  
Inflation Targeting ◽  
Exchange Rate Regimes ◽  
Flexible Exchange Rate ◽  
The Exchange Rate ◽  
The Republic ◽  
Pass Through

The paper explores (former) transition economies, Poland, Czech Republic, Slovakia and the Republic of Serbia, concerning abandonment of the exchange rate targeting and fixed exchange rate regimes and movement toward explicit/implicit inflation targeting and flexible exchange rate regimes. The paper identifies different subperiods concerning crucial monetary and exchange rate regimes, and tracks the changes of specific monetary transmission channels i.e. exchange rate channel, interest rate channel, indirect and direct influences to the exchange rate, with variance decomposition of VAR/VEC model. The empirical results indicate that Polish monetary strategy toward higher monetary and exchange rate flexibility has been performed smoothly, gradually and planned, compared to the Slovak and, especially, Czech case. The comparison of three former transition economies with the Serbian case indicate strong and persistent exchange rate pass-through, low interest rate pass-through, significant indirect and direct influence to the exchange rate as potential obstacles for successful inflation targeting in the Republic of Serbia.

The influence of inflation targeting on the pass-through effect of the exchange rate

2018 ◽  
pp. 70-84
Author(s):  
Ph. S. Kartaev ◽  
Yu. I. Yakimova
Keyword(s):  
Developing Countries ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Inflation Targeting ◽  
Policy Regime ◽  
Short And Long Term ◽  
The Exchange Rate ◽  
Pass Through ◽  
The Impact

The paper studies the impact of the transition to the inflation targeting regime on the magnitude of the pass-through effect of the exchange rate to prices. We analyze cross-country panel data on developed and developing countries. It is shown that the transition to this regime of monetary policy contributes to a significant reduction in both the short- and long-term pass-through effects. This decline is stronger in developing countries. We identify the main channels that ensure the influence of the monetary policy regime on the pass-through effect, and examine their performance. In addition, we analyze the data of time series for Russia. It was concluded that even there the transition to inflation targeting led to a decrease in the dependence of the level of inflation on fluctuations in the ruble exchange rate.

Inflation targeting and exchange rate regimes in emerging markets

2018 ◽  
Vol 18 (2) ◽  
Author(s):  
Christian Ebeke ◽  
Armand Fouejieu
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Inflation Targeting ◽  
Propensity Scores ◽  
Exchange Rate Regime ◽  
Flexible Exchange Rate ◽  
Marginal Effect ◽  
It Adoption ◽  
Exchange Rate Flexibility ◽  
The Exchange Rate

Abstract This paper investigates the effects of the adoption of inflation targeting (IT) on the choice of exchange rate regime in emerging markets (EMs), conditional on certain macroeconomic conditions. Using a large sample of EMs and after dampening the endogeneity of the adoption of IT using a selection on observables, we find that IT countries on average have a relatively more flexible exchange rate regime than other EMs. However, the flexibility of the exchange rate regime shows strong heterogeneity among IT countries. IT countries with low trade and financial openness and with a large share of external debt exhibit a lower exchange rate flexibility than others. Moreover, the marginal effect of IT adoption on the exchange rate flexibility increases with the duration of the IT regime in place, and with the propensity scores to adopt it.

scholarly journals Asymmetry in Exchange Rate Pass-Through to Consumer Prices: New Perspective from Sub-Saharan African Countries

Economies ◽  
2019 ◽  
Vol 7 (1) ◽  
pp. 5
Author(s):  
Diby François Kassi ◽  
Dilesha Nawadali Rathnayake ◽  
Akadje Jean Roland Edjoukou ◽  
Yobouet Thierry Gnangoin ◽  
Pierre Axel Louembe ◽  
...  
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Regimes ◽  
Short Term ◽  
Franc Zone ◽  
Consumer Prices ◽  
Cfa Franc Zone ◽  
The Exchange Rate ◽  
Sub Saharan ◽  
Pass Through ◽  
Exchange Rate Pass Through

This paper examines the asymmetrical relationship between exchange rate and consumer prices in 40 sub-Saharan African (SSA) countries from 1990Q1 to 2017Q4. We estimate the exchange rate pass-through (ERPT) to consumer prices for each country by using the nonlinear autoregressive distributed lag (NARDL) framework and dynamic panel techniques robust to cross-sectional dependence. First, our findings suggest an asymmetrical ERPT in the SSA region during the short term, whereas there are mixed results across subregions in the long term. Second, the results of the panel analysis suggest incomplete and significant ERPT to consumer prices in the entire SSA region, which is higher during depreciation of the local currency than after appreciation in the short-term, especially in the CFA Franc zone. Third, we find nonlinear ERPT with respect to the size of the exchange rate. Finally, we find that pass-through is higher in countries with fixed exchange rate regimes (CFA franc zone) in a low inflationary environment than in countries with floating exchange rate regimes and high inflation levels. Pass-through is greater during large exchange rate changes than after small changes. Therefore, the policy implication is to consider these asymmetries and nonlinearities to improve monetary policy’s credibility, enhance trade liberalization, and promote competitive market structures in the SSA region.

scholarly journals The Effectiveness of the Monetary Transmission Mechanism in Ukraine since the Transition to Inflation Targeting

2019 ◽  
pp. 19-37
Author(s):  
Oleksandr Zholud ◽  
Volodymyr Lepushynskyi ◽  
Sergiy Nikolaychuk
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Monetary Transmission ◽  
Interest Rate Policy ◽  
Leading Role ◽  
The Exchange Rate ◽  
The Interest Rate

This paper analyzes the effectiveness of monetary transmission channels in Ukraine since the National Bank of Ukraine (NBU) transitioned to inflation targeting and after the central bank established its new approach to monetary policy implementation. The authors conclude that the central bank has sufficient control over short-term interest rates in the interbank market and that it uses them to influence other financial market indicators. At the same time, further transmission via the interest rate channel is constrained by weak lending and the banking system’s slow post-crisis recovery. The exchange rate channel remains the most powerful avenue of monetary transmission. After the NBU switched to a floating exchange rate and an active interest rate policy, its key rate became a means of influencing exchange rates. The exchange rate channel’s leading role is expected to gradually decrease but remains important, as is typical for small open economies.

scholarly journals Key Policy Rate as the Main or Additional Instrument of Inflation Targeting Strategy in Serbia

2017 ◽  
Vol 55 (2) ◽  
pp. 143-159 ◽  
Author(s):  
Srđan Furtula ◽  
Milan Kostić
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Great Influence ◽  
Policy Instrument ◽  
Primary Objective ◽  
Key Policy ◽  
The Exchange Rate ◽  
The Republic

AbstractIn achieving price stability as the primary objective of monetary policy, the National Bank of Serbia uses the key policy rate as the main instrument of monetary policy, while other instruments have a supporting role - contribute to a smooth transmission of the key policy rate on the market, as well as the development of financial markets. However, because the conditions in which economic and financial system of the Republic of Serbia works, transmission mechanism of monetary policy is conducted mainly through the exchange rate channel, while the channel of interest rates almost did not work. The great impact the exchange rate channel is determined by the great influence of the single currency euro and the ECB on our country. Therefore, the aim of this paper is to analyse the efficiency of the key policy rate as a monetary policy instrument, because in recent years the primary instrument receives a secondary character in the monetary regulation.

scholarly journals Monetary Policy Response on Exchange Rate Dynamics: The Case of Indonesia

2017 ◽  
Author(s):  
Ferry Syarifuddin
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Open Economy ◽  
Inflation Targeting ◽  
Exchange Rate Dynamics ◽  
Macroeconomic Indicators ◽  
The Exchange Rate ◽  
The Impact ◽  
Domestic Interest Rate ◽  
Policy Interest

Bank Indonesia has been implementing Enhanced Inflation Targeting Framework (EITF) since few years ago. The main monetary instrument is short term policy interest rate. The policy interest rate, in this regard, may also have significant role in driving the exchange rate to its desired level. Setting appropriate the interest rate to drive the exchange rate is important to drive the actual inflation to its official target. In order to see the response of policy interest rate to exchange rate dynamics as well as the impact of exchange-rate dynamics to macroeconomic indicators, Structural Co-integrating Vector Auto Regression (SC-VAR) in an open economy model, is implemented. Its finding shows that exchange rate dynamic of USD/IDR has significantly positive relationship with domestic interest rate. The increase of the USD/IDR (depreciation) will then push domestic interest rate to increase.

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