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Interest Rate, Exchange Rate And Inflation In Romania. Correlates And Interconnection

Author

Listed:
  • Gheorghe MOROSAN

    (Stefan cel Mare University, morosang59@gmail.com, Suceava, Romania,)

  • Ioana Madalina ZUBAS

    (Stefan cel Mare University, ioanazubas@yahoo.com, Suceava, Romania,)

Abstract

The connection between the interest rate, the exchange rate and inflation is important due to their impact and volatility on the economical balance. This article aims to establish the relation between these factors, first on a theoretical level, followed by an econometric one, taking Romania as being the subject. By applying the regression method, the study aims to establish an interdependence relation between inflation, exchange value and interest rate, and conclude by answering which of these has a more powerful impact on modifying the others by testing several hypotheses.

Suggested Citation

  • Gheorghe MOROSAN & Ioana Madalina ZUBAS, 2015. "Interest Rate, Exchange Rate And Inflation In Romania. Correlates And Interconnection," Journal of Public Administration, Finance and Law, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 8(8), pages 146-160, December.
    • Handle: RePEc:aic:jopafl:y:2015:v:8:p:146-160
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    References listed on IDEAS

    as
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    2. Martin Eichenbaum & Charles L. Evans, 1995. "Some Empirical Evidence on the Effects of Shocks to Monetary Policy on Exchange Rates," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 975-1009.
    3. Ricardo J. Caballero & Emmanuel Farhi & Pierre-Olivier Gourinchas, 2008. "An Equilibrium Model of "Global Imbalances" and Low Interest Rates," American Economic Review, American Economic Association, vol. 98(1), pages 358-393, March.
    4. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(2), pages 379-408.
    5. Mishkin, Frederic S. & Savastano, Miguel A., 2001. "Monetary policy strategies for Latin America," Journal of Development Economics, Elsevier, vol. 66(2), pages 415-444, December.
    6. Ben S. Bernanke, 2005. "The global saving glut and the U.S. current account deficit," Speech 77, Board of Governors of the Federal Reserve System (U.S.).
    7. Jonathan David Ostry & Atish R. Ghosh & Karl F Habermeier & Marcos d Chamon & Mahvash S Qureshi & Dennis B. S. Reinhardt, 2010. "Capital Inflows; The Role of Controls," IMF Staff Position Notes 2010/04, International Monetary Fund.
    8. repec:fip:fedgsq:y:2005:i:mar10 is not listed on IDEAS
    9. Sánchez, Marcelo, 2005. "The link between interest rates and exchange rates: do contractionary depreciations make a difference?," Working Paper Series 548, European Central Bank.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    interest rate; inflation rate; exchange rate;
    All these keywords.

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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