Euroization and cyclical stabilization in Montenegro: an empirical analysis
The aim of this paper is to evaluate the importance of the issue of the loss of an independent monetary policy in the case of officially euroized Montenegro. We examine the extent to which the monetary policy of the European Central Bank, which is set according to the economic conditions prevailing in the euro area, has contributed to the stabilisation of the business cycle of unilaterally euroized Montenegro. It is shown that under euroization the ECB monetary policy has been acyclical with respect to Montenegrin inflation and significantly countercyclical with respect to Montenegrin output growth. The comparative analysis with Serbia does not show that keeping an independent monetary policy would have improved the cyclical stabilisation in Montenegro. The pass-through from ECB policy rates to retail interest rates prevailing at commercial banks in Montenegro is shown to depend significantly on the macroeconomic and banking conditions prevailing in Montenegro.
|Date of creation:||25 Apr 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
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.:
- Edwards, Sebastian, 2001. "Dollarization: Myths and realities," Journal of Policy Modeling, Elsevier, vol. 23(3), pages 249-265, April.
- Nikola Fabris & Zorica Kalezic, 2008. "Is monetary policy possible without an issuance function: the case of Montenegro," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 1(4), pages 356-375.
- Edwards, Sebastian & Magendzo, I. Igal, 2006.
"Strict Dollarization and Economic Performance: An Empirical Investigation,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 38(1), pages 269-282, February.
- Sebastian Edwards & I. Igal Magendzo, 2003. "Strict Dollarization and Economic Performance: An Empirical Investigation," NBER Working Papers 9820, National Bureau of Economic Research, Inc.
- Carl E. Walsh, 2010. "Monetary Theory and Policy, Third Edition," MIT Press Books, The MIT Press, edition 3, volume 1, number 0262013770, June.
- Sokic, Alexandre, 2010.
"The monetary analysis of hyperinflation and the appropriate specification of the demand for money,"
21503, University Library of Munich, Germany.
- Alexandre Sokic, 2012. "The Monetary Analysis of Hyperinflation and the Appropriate Specification of the Demand for Money," German Economic Review, Verein für Socialpolitik, vol. 13(2), pages 142-160, 05.
- Kurt Schuler, 2005. "Some Theory and History of Dollarization," Cato Journal, Cato Journal, Cato Institute, vol. 25(1), pages 115-125, Winter.
- Larbi Dohni & Henri Bourguinat, 2002. "La dollarisation comme solution en dernier ressort," Revue Française d'Économie, Programme National Persée, vol. 17(1), pages 57-96.
- Adalbert Winkler & Francesco Mazzaferro & Carolin Nerlich & Christian Thimann, 2004. "Official dollarisation/euroisation - motives, features and policy implications of current cases," Occasional Paper Series 11, European Central Bank.
- Louis-Philippe Rochon & Sergio Rossi & Sergio Rossi, 2003. "Dollarization Out, Euroization In," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 33(1), pages 21-41, April.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:46537. 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: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.