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The Game of Anchors: Studying the Causes of Currency Crises in Belarus

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  • Alex Miksjuk
  • Mr. Sam Ouliaris
  • Mikhail Pranovich

Abstract

Belarus experienced a sequence of currency crises during 2009-2014. Our empirical results, based on a structural econometric model, suggest that the activist wage policy and extensive state program lending (SPL) conflicted with the tightly managed exchange rate regime and suppressed monetary policy transmission. This created conditions for the unusually frequent crises. At the current juncture, refocusing monetary policy from exchange rate to inflation would help to avoid disorderly external adjustments. The government should abandon wage targets and phase out SPL to remove the underlying source of the imbalances and ensure lasting stabilization.

Suggested Citation

  • Alex Miksjuk & Mr. Sam Ouliaris & Mikhail Pranovich, 2015. "The Game of Anchors: Studying the Causes of Currency Crises in Belarus," IMF Working Papers 2015/281, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2015/281
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    References listed on IDEAS

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    Cited by:

    1. ICHOU Mohammed Adil & RASSAM Driss & ABBADI Idriss & ELHIRI Abderrazak, 2021. "Pressure Measurement on the Foreign Exchange Market and Currency Crises in Morocco," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 11(2), pages 1-4.
    2. Stephan Barisitz, 2016. "Belarus in recession, banking sector in difficulties – Russia to the rescue," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 41-49.
    3. Karel Musil & Mikhail Pranovich & Mr. Jan Vlcek, 2018. "Structural Quarterly Projection Model for Belarus," IMF Working Papers 2018/254, International Monetary Fund.

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