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Subduing High Inflation in Romania. How to Better Monetary and Exchange Rate Mechanisms?

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  • Daniel Daianu
  • Radu Vranceanu

Abstract

Romania's overall economic performance during the first ten years of transition can be termed so far as disappointing: the country has not been able to deliver steady growth, low unemployment and low inflation. This paper focuses on the effectiveness of monetary mechanisms and policies during this period. Special emphasis is set on the exchange rate mechanism. The first part of the text develops a short introduction to relevant monetary theory in the transition context. In the second part, we analyse the stylised facts pertaining to Romanian economy and put forward some weaknesses of its banking system and monetary policies. The conclusion presents a set of recommendations for a reform of the going monetary policy.

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File URL: http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp402.pdf
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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 402.

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Length: pages
Date of creation: 01 Aug 2001
Date of revision:
Handle: RePEc:wdi:papers:2001-402

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Keywords: monetary policy; banking system; exchange rate mechanism; Romania; policy reform;

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References

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  3. Daniel Daianu, 1994. "Inter-Enterprise Arrears in a Post-Command Economy," IMF Working Papers 94/54, International Monetary Fund.
  4. Guillermo A. Calvo & Carmen M. Reinhart, 2000. "Fear of Floating," NBER Working Papers 7993, National Bureau of Economic Research, Inc.
  5. Luis A. Rivera-Batiz & Amadou N. R. Sy, 2013. "Currency Boards, Credibility, and Macroeconomic Behavior," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 831-870, November.
  6. Rachel McCulloch & Blake LeBaron, 2000. "Floating, Fixed, or Super-Fixed? Dollarization Joins the Menu of Exchange-Rate Options," American Economic Review, American Economic Association, American Economic Association, vol. 90(2), pages 32-37, May.
  7. Kenen, Peter B, 1995. "Capital Controls, the EMS and EMU," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 105(428), pages 181-92, January.
  8. Pinto, Brian & Drebentsov, Vladimir & Morozov, Alexander, 2000. "Give growth and macroeconomic stability in Russia a chance - harden budgets by eliminating nonpayments," Policy Research Working Paper Series 2324, The World Bank.
  9. Flood, Robert & Marion, Nancy, 1999. "Perspectives on the Recent Currency Crisis Literature," International Journal of Finance & Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 4(1), pages 1-26, January.
  10. Andres Velasco & Roberto Chang, 2000. "Exchange-Rate Policy for Developing Countries," American Economic Review, American Economic Association, American Economic Association, vol. 90(2), pages 71-75, May.
  11. Lionel Halpern & Charles Wyplosz, 1996. "Equilibrium Exchange Rates in Transition Economies," IMF Working Papers 96/125, International Monetary Fund.
  12. Dani Rodrik, 2000. "Institutions for High-Quality Growth: What They are and How to Acquire Them," NBER Working Papers 7540, National Bureau of Economic Research, Inc.
  13. Anne Marie Gulde & Juha Kähkönen & Peter Keller, 2000. "Pros and Cons of Currency Board Arrangements in the Lead-Up to EU Accession and Participation in the Euro Zone," IMF Policy Discussion Papers 00/1, International Monetary Fund.
  14. Stephen W. Salant & Dale W. Henderson, 1976. "Market anticipations, government policy, and the price of gold," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 81, Board of Governors of the Federal Reserve System (U.S.).
  15. M. F. Bleaney, 1999. "Price and Monetary Dynamics Under Alternative Exchange Rate Regimes," IMF Working Papers 99/67, International Monetary Fund.
  16. Krugman, Paul, 1979. "A Model of Balance-of-Payments Crises," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 11(3), pages 311-25, August.
  17. Robert J. Barro & David B. Gordon, 1983. "Rules, Discretion and Reputation in a Model of Monetary Policy," NBER Working Papers 1079, National Bureau of Economic Research, Inc.
  18. Eduardo Borensztein & Andrew Berg, 2000. "The Pros and Cons of Full Dollarization," IMF Working Papers 00/50, International Monetary Fund.
  19. J. Stiglitz, 1999. "Whither Reform? Ten Years of the Transition," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.
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Cited by:
  1. Marius-Razvan Surugiu & Camelia Surugiu, 2012. "Intra-industry trade in Romania: analysis of the automobile parts and accessories sector," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, Inderscience Enterprises Ltd, vol. 4(1/2), pages 166-179.
  2. Daianu, Daniel & Kallai, Ella, 2008. "Disinflation and Inflation Targeting in Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, Institute for Economic Forecasting, vol. 5(1), pages 59-81, March.

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