Monetary Transmission Mechanism in Estonia - Some Theoretical Considerations and Stylized Aspects
AbstractThe monetary system in Estonia is based on the currency board arrangement with German Mark. The strong commitments and rule-based features of currency board imply that there is no active monetary policy in Estonia – all necessarily monetary djustments 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. The interest rate and credit channel have gained special attention in this paper.
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Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 0212001.
Length: 25 pages
Date of creation: 09 Dec 2002
Date of revision:
Note: Type of Document - Acrobat PDF; pages: 25; figures: 11 figures. Working Papers of Eesti Pank. No 4, 2001. See also:
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CBA; MTM; Monetary Policy Transmission; Estonia; Currency Board;
Other versions of this item:
- Raoul Lättemäe, 2001. "Monetary transmission mechanism in Estonia - some theorethical considerations and stylized aspects," Bank of Estonia Working Papers 2001-4, Bank of Estonia, revised 13 Oct 2001.
- 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-2002-12-17 (All new papers)
- NEP-IFN-2002-12-17 (International Finance)
- NEP-MON-2002-12-17 (Monetary Economics)
- NEP-TRA-2002-12-17 (Transition Economics)
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