Advanced Search
MyIDEAS: Login to save this article or follow this journal

Exchange Rate And Repo Interest Rate In Serbia: What Happened In 2012 And Lessons For Reindustrialization


Author Info

  • Miroljub Labus

    (University of Belgrade, Faculty of Law)

Registered author(s):


    Monetary policy changes in 2012 were unpredictable. This cannot be simply attributed to the election cycle. More fundamentally, incoherent policy measures have been present since the onset of the 2008 global recession. Within such a framework, industrialization and economic policy were treated as unrelated and not in need of alignment. In our view, they are essentially associated, but in an asymmetric way. It is difficult for monetary and exchange rate policy measures to stimulate growth, which is the essence of industrialization, but they can easily discourage it. Zence, the 6overnment of Serbia has to transparently define the industrialization policy over the medium term, and align it with other policy measures, including the monetary policy of the National 8ank of Serbia. The first thing to do so is to remove economic policy obstacles to growth. Zigh interest rates and the overvalued domestic currency are serious obstacles to industrialization in Serbia. Looking back at 2012, the National 8ank of Serbia pursued a stop-and-go monetary policy. It eventually returned to the repo rate as the main policy instrument to cure injation. This initially stabilized the exchange rate level, but increased its volatility and overvalued the currency. In the long run the exchange rate should asymptotically approach its purchasing power parity level, which has happened two times in recent history in Serbia. In the meantime, short term factors are predominant, including injation targeting monetary policy and delayed adjustment of the exchange rate to its equilibrium value. This is considered costly in terms of forgone output and export.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL:
    Download Restriction: no

    Bibliographic Info

    Article provided by SAE - Serbian Association of Economists in its journal SAE Journal.

    Volume (Year): (2013)
    Issue (Month): 1-2 (January)
    Pages: 19-30

    as in new window
    Handle: RePEc:srb:journl:y:2013:i:1-2:p:19-30

    Contact details of provider:
    Postal: Bulevar Mihajla Pupina 147, Dobrinjska 11, Belgrade, Serbia
    Phone: +381 11 3613-409; +381 11 2644-980
    Fax: +381 11 3629-689
    Web page:
    More information through EDIRC

    Related research

    Keywords: exchange rate; purchasing power parity; uncovered interest rate parity; monetary policy; VEC model; DSGE model; industrialization;

    Find related papers by JEL classification:


    No references listed on IDEAS
    You can help add them by filling out this form.



    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


    Access and download statistics


    When requesting a correction, please mention this item's handle: RePEc:srb:journl:y:2013:i:1-2:p:19-30. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Milos Stamatovic).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.