Credibility and Monetary Policy: The Case of Serbia
The efforts made by Serbia and other transition economies to control inflation led their central banks to pay close attention to the credibility of their monetary policy, particularly during the last decade. The monetary policy credibility in Serbia has always been a matter of discussion. One of the main indicators of the lack of credibility in Serbia’s monetary policy is a high level of foreign currency deposits in the M3 monetary aggregate caused by high eurization level. The lack of trust by the public in the national currency and its exchange rate is reflected in the large proportion of foreign deposits in the sum of demand deposits and savings and time deposits. Furthermore, the process of indexation of transactions to foreign currency (primarily the euro) is still evident. As the result, the national currency has merely the function of the means of payment and conducting transactions, but lacks the functions of measuring value, saving and crediting. This article considers the concept of credibility from both the theoretical and practical viewpoint. The advantages of high credibility are discussed, with a particular focus on Serbia’s experience with explicit inflation-control targets, and measures taken by the National Bank of Serbia to enhance the credibility of its monetary policy are explained.
|This chapter was published in: ||This item is provided by Institute of Economic Sciences in its series Book Chapters with number
srbeu-7.||Handle:|| RePEc:ibg:chaptr:srbeu-7||Contact details of provider:|| Postal: 12 Zmaj Jovina St, 11000 Belgrade, Serbia|
Phone: +381 11 2622 357, 2623 055
Fax: +381 11 2181 471
Web page: http://www.ien.bg.ac.rs
More information through EDIRC
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.:
- Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
- Allan Drazen & Paul R. Masson, 1993.
"Credibility of Policies versus Credibility of Policymakers,"
NBER Working Papers
4448, National Bureau of Economic Research, Inc.
- Allan Drazen & Paul R. Masson, 1994. "Credibility of Policies Versus Credibility of Policymakers," The Quarterly Journal of Economics, Oxford University Press, vol. 109(3), pages 735-754.
- Paul R Masson & Allan Drazen, 1994. "Credibility of Policies Versus Credibility of Policymakers," IMF Working Papers 94/49, .
- Blackburn, Keith & Christensen, Michael, 1989. "Monetary Policy and Policy Credibility: Theories and Evidence," Journal of Economic Literature, American Economic Association, vol. 27(1), pages 1-45, March.
- van der Cruijsen, Carin & Demertzis, Maria, 2007.
"The impact of central bank transparency on inflation expectations,"
European Journal of Political Economy,
Elsevier, vol. 23(1), pages 51-66, March.
- Carin van der Cruijsen & Maria Demertzis, 2005. "The Impact of Central Bank Transparency on Inflation Expectations," DNB Working Papers 031, Netherlands Central Bank, Research Department.
When requesting a correction, please mention this item's handle: RePEc:ibg:chaptr:srbeu-7. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zorica Bozic)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.