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On the Link between Exchange-Rate Regimes and Monetary-Policy Autonomy: The European Experience


  • Forssbaeck, Jens

    (Institute of Economic Research)

  • Oxelheim, Lars

    () (The Research Institute of Industrial Economics)


We investigate monetary-policy autonomy under different exchange-rate regimes in small, open European economies during the 1980s and 1990s. We find no systematic link between ex post monetary-policy autonomy and exchange rate regimes. This result is enforced for countries/periods with alternative nominal targets. Our interpretation of the results is that over the medium and long term following an ‘independent’ target for monetary policy, which does not deviate much from the targets of those countries to which one is closely financially integrated, is as constraining as locking the exchange rate to some particular level

Suggested Citation

  • Forssbaeck, Jens & Oxelheim, Lars, 2005. "On the Link between Exchange-Rate Regimes and Monetary-Policy Autonomy: The European Experience," Working Paper Series 637, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0637

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    References listed on IDEAS

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    Cited by:

    1. Craigwell, Roland & Greenidge, Kevin & Maynard, Tracy, 2009. "Exchange rate regimes and monetary autonomy: Empirical evidence from selected Caribbean countries," MPRA Paper 33437, University Library of Munich, Germany.

    More about this item


    Exchange Rate Regimes; Monetary Policy Autonomy; Capital Mobility;

    JEL classification:

    • 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
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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