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On the Link between Exchange-Rate Regimes and Monetary-Policy Autonomy: The European Experience

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Author Info
Forssbaeck, Jens (Institute of Economic Research)
Oxelheim, Lars () (The Research Institute of Industrial Economics)

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Abstract

We investigate monetary-policy autonomy under different exchange-rate regimes in small, open European economies during the 1980s and 1990s. We find no systematic link between ex post monetary-policy autonomy and exchange rate regimes. This result is enforced for countries/periods with alternative nominal targets. Our interpretation of the results is that over the medium and long term following an ‘independent’ target for monetary policy, which does not deviate much from the targets of those countries to which one is closely financially integrated, is as constraining as locking the exchange rate to some particular level

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Publisher Info
Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 637.

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Length: 39 pages
Date of creation: 15 Mar 2005
Date of revision:
Publication status: Published in The World Economy, 2006, pages 341-368.
Handle: RePEc:hhs:iuiwop:0637

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Related research
Keywords: Exchange Rate Regimes; Monetary Policy Autonomy; Capital Mobility;

Find related papers by JEL classification:
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
F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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