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Monetary policy, macroeconomic adjustment and currency speculation under floating exchange rates: the case of Bulgaria

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  • Rumen Dobrinsky

Abstract

This paper deals with the Bulgarian experience with exchange rate policy and the related macroeconomic adjustment in the transition period. It is argued that in the context of the Bulgarian macroeconomic environment, the exchange rate regime and the exchange rate policy (or the lack of such) did play a crucial role in determining the patterns of macroeconomic adjustment in this period. A simple general equilibrium model is suggested that provides some insights into the stylized performance of an economy under certain assumptions, similar to those characterizing the transitional state of the Bulgarian economy. Finally, some aspects of Bulgarian macroeconomic performance in recent years are analysed on the basis of the available empirical information and using the framework of the theoretical model. The paper concludes with the policy lessons of this experience.

Suggested Citation

  • Rumen Dobrinsky, 1996. "Monetary policy, macroeconomic adjustment and currency speculation under floating exchange rates: the case of Bulgaria," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(1), pages 185-210, May.
    • Handle: RePEc:bla:etrans:v:4:y:1996:i:1:p:185-210
    DOI: 10.1111/j.1468-0351.1996.tb00168.x
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    References listed on IDEAS

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    1. Peter J. Quirk, 1994. "Fixed or Floating Exchange Regimes: Does it Matter for Inflation?," IMF Working Papers 1994/134, International Monetary Fund.
    2. Portes, Richard, 1991. "The Transition to Convertibility in Eastern Europe and the USSR," CEPR Discussion Papers 500, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Budina, Nina & Garretsen, Harry & Jong, Eelke de, 1999. "Liquidity constraints and investment in transition economies : the case of Bulgaria," Research Report 00E05, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    2. Muco, Marta & Papapanagos, Harry & Sanfey, Peter, 1999. "The Determinants of Official and Free-Market Exchange Rates in Albania during Transition," Journal of Comparative Economics, Elsevier, vol. 27(3), pages 534-552, September.
    3. Dimitar Dimitrov & Rumen Dobrinsky & Nasko Dochev & Rumyana Kolarova & Nikolay Markov & Boyko Nikolov, 2004. "Understanding Reform: A Country Study for Bulgaria," wiiw Balkan Observatory Working Papers 56, The Vienna Institute for International Economic Studies, wiiw.
    4. repec:dgr:rugsom:00e05 is not listed on IDEAS
    5. Kaminski, Bartlomiej & Ng, Francis, 2006. "Bulgaria's integration into the Pan-European economy and industrial restructuring," Policy Research Working Paper Series 3863, The World Bank.

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