Monetary transmission mechanism in Estonia - some theorethical considerations and stylized aspects
AbstractThe monetary system in Estonia is based on the currency board arrangement. The strong commitments and rule-based features of currency board imply that there is no active monetary policy in Estonia - all necessarily monetary adjustments are left to the market forces. Under fixed exchange rate and free capital mobility Estonian monetary conditions are therefore closely linked with monetary policy in Europe - in addition to the changes in Estonian risk-premium, interest rate developments in Europe can directly influence Estonian interest rates. Those monetary signals transmit widely into Estonian financial sector and ultimately into Estonian real sector through various channels. Some theoretical and intuitive aspects that can affect this process in Estonia have gained special attention in this paper.
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Bibliographic InfoPaper provided by Bank of Estonia in its series Bank of Estonia Working Papers with number 2001-4.
Length: 24 pages
Date of creation: 13 Oct 2001
Date of revision: 13 Oct 2001
Postal: Estonia bld. 13, 15095 Tallinn, ESTONIA
Other versions of this item:
- Raoul Lättemäe, 2002. "Monetary Transmission Mechanism in Estonia - Some Theoretical Considerations and Stylized Aspects," Macroeconomics 0212001, EconWPA.
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-07-25 (All new papers)
- NEP-CBA-2005-07-25 (Central Banking)
- NEP-FMK-2005-07-25 (Financial Markets)
- NEP-IFN-2005-07-25 (International Finance)
- NEP-MAC-2005-07-25 (Macroeconomics)
- NEP-MON-2005-07-25 (Monetary Economics)
- NEP-TRA-2005-07-25 (Transition Economics)
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