Exchange Rate Policy and Output Growth: The Experience of the Transition Economies of Central and Eastern Europe
This article examines the contribution of exchange rate policy to output growth in the transition economies of Central and Eastern Europe. The analysis identifies two major channels through which the exchange rate affects output. The first is the direct effect which operates on output through its impact on international price competitiveness. The second channel, the indirect one, relies on the close association between disinflation and growth in these countries. That is, to the extent that the exchange rate policy has contributed to lower inflation in these countries it has indirectly caused higher economic growth. The experience of these economies as well as the results of a preliminary empirical analysis strongly suggest that both channels are very important to output growth. In addition, the analysis indicates that a fixed exchange rate regime during the transition process may serve the growth objective better since, to the extent that it is more effective in reducing inflation, it exerts a positive influence on output growth through the direct channel as well.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 11 (1999)
Issue (Month): 3 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/CPCE20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/CPCE20|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Paul R Masson & Morris Goldstein & Jacob A. Frenkel, 1991. "Characteristics of a Successful Exchange Rate System," IMF Occasional Papers 82, International Monetary Fund.
- Dimitri G Demekas & Mohsin S. Khan, 1991.
"The Romanian Economic Reform Program,"
IMF Working Papers
91/80, International Monetary Fund.
- Mohsin S. Khan & Dimitri G Demekas, 1991. "The Romanian Economic Reform Program," IMF Occasional Papers 89, International Monetary Fund.
- Guillermo Calvo & Eduardo Borensztein & Paul R Masson & Manmohan S. Kumar, 1993. "Financial Sector Reforms and Exchange Arrangements in Eastern Europe," IMF Occasional Papers 102, International Monetary Fund.
- Bijan B. Aghevli & Eduardo Borensztein & Tessa Van der Willigen, 1992. "Stabilization and Structural Reform in the Czech and Slovak Federal Republic; First Stage," IMF Occasional Papers 92, International Monetary Fund.
- Bruno, Michael & Easterly, William, 1998. "Inflation crises and long-run growth," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 3-26, February.
- Bruno, Michael & Easterly, William, 1995. "Inflation crises and long-run growth," Policy Research Working Paper Series 1517, The World Bank.
- Michael Bruno & William Easterly, 1995. "Inflation Crises and Long-Run Growth," NBER Working Papers 5209, National Bureau of Economic Research, Inc.
- Corden, W Max, 1993. "Exchange Rate Policies for Developing Countries," Economic Journal, Royal Economic Society, vol. 103(416), pages 198-207, January.
- Peter J Montiel & Bijan B. Aghevli & Mohsin S. Khan, 1991. "Exchange Rate Policy in Developing Countries; Some Analytical Issues," IMF Occasional Papers 78, International Monetary Fund. Full references (including those not matched with items on IDEAS)