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Monetary Policy Rules in Central and Eastern European Countries: Does the Exchange Rate Matter?

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  • M. FRÖMMEL

    ()

  • G. GARABEDIAN
  • F. SCHOBERT

Abstract

We estimate monetary policy rules for six central and eastern European countries (CEEC) during the period, when they prepared for membership to the EU and monetary union. By taking changes in the policy settings explicitly into account and by introducing several new methodological features we significantly improve estimation results for monetary policy rules in CEEC. We find that in the Czech Republic, Hungary and Poland the focus of the interest rate setting behaviour switched from defending the peg to targeting inflation. For Slovakia, however, there still seemed to be on ongoing focus on the exchange rate. For Slovenia and only after a policy switch for Romania we find a solid relation with inflation as well.

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Bibliographic Info

Paper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 09/611.

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Length: 27 pages
Date of creation: Aug 2009
Date of revision:
Handle: RePEc:rug:rugwps:09/611

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Keywords: monetary policy; Taylor rules; transition economies; CEEC; inflation targeting;

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Citations

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Cited by:
  1. Tiwari, Aviral Kumar & Mutascu, Mihai & Andries, Alin Marius, 2013. "Decomposing time-frequency relationship between producer price and consumer price indices in Romania through wavelet analysis," Economic Modelling, Elsevier, vol. 31(C), pages 151-159.
  2. Marc Pourroy, 2013. "Inflation-Targeting and Foreign Exchange Interventions in Emerging Economies," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00881359, HAL.
  3. Regős, Gábor, 2013. "Kockázattal kiegészített Taylor-szabályok becslése Magyarországra
    [Estimation of risk-augmented Taylor rules for Hungary]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 670-702.
  4. Jimborean, R., 2011. "The Exchange Rate Pass-Through in the New EU Member States," Working papers 341, Banque de France.
  5. POPESCU Iulian Vasile, 2013. "Monetary Policy Rules For European Monetary Union Acceding Countries," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 8(2), pages 108-122, August.

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