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Study the relation between monetary and exchange rate policy: The case of Belarus

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  • Miksjuk Alexei

Abstract

A simplified structural model of Belarusian economy is employed to study the relation between monetary and exchange rate policy in Belarus. It is confirmed that in the long run monetary policy and exchange rate policy can not be used independently. In the short-run monetary and exchange rate policy provides the National Bank of Belarus with 2 independent tools to respond to shocks. The Bank can compensate over-one-year-long transitory shocks via monetary policy adjustment and foreign exchange interventions. The Bank can not compensate and rather needs to adjust to permanent shocks: monetary policy adjustment ensures stable inflation, exchange rate adjustment is more appropriate for output stabilization. Foreign exchange interventions allow for smoother policy response and smoother economic adjustment.

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  • Miksjuk Alexei, 2011. "Study the relation between monetary and exchange rate policy: The case of Belarus," EERC Working Paper Series 11/16e, EERC Research Network, Russia and CIS.
    • Handle: RePEc:eer:wpalle:11/16e
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    More about this item

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • 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
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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