2 edition of Monetary policy targeting in Central Europe"s transition economies found in the catalog.
Monetary policy targeting in Central Europe"s transition economies
Lucjan T. Orlowski
Includes bibliographical references (p. 28-29).
|Other titles||Direct inflation targeting|
|Statement||Lucjan T. Orlowski.|
|Series||CASE-CEU working papers series,, 11|
|LC Classifications||HG930.7 .O75 1998|
|The Physical Object|
|Pagination||30 p. ;|
|Number of Pages||30|
|LC Control Number||99195663|
It is not easy to ascertain the extent to which changes in macroeconomic performance are due to adoption of IT alone. But, all in all, there is fairly compelling evidence for some countries under examination that inflation has become less volatile and persistent in the post IT period, interest rates have become less volatile and inflation expectations more responsive to monetary policy moves. It is clear in retrospect that our attempts last spring to provide guidance about the potential timing and pace of tapering confused market participants. Bank-by-bank ceilings and interest rate controls on commercial bank deposit and lending rates that had been imposed in the initial transition phase were also eliminated. But the interest spread, defined as the difference at the end of the year between the rates on short-term bank loans in domestic currency and rates on deposits was, over the same period, one of the highest in the transition countries. The ECB, therefore, plans on a prolonged period of "ample monetary stimulus.
A second conclusion is that the exchange rate has a significant effect on inflation during all time periods examined. But, all in all, there is fairly compelling evidence for some countries under examination that inflation has become less volatile and persistent in the post IT period, interest rates have become less volatile and inflation expectations more responsive to monetary policy moves. In all countries under examination, fully fledged IT was adopted at different points in time over the last ten years or so as the underlying framework for the conduct of monetary policy. Because the conditions necessary for liftoff are well-specified, market participants should be able to think right along with policymakers, adjusting their views about the prospects for normalization in response to the incoming data.
Can monetary policy work in transition? While progress has been made in strengthening the system, problems remain, particularly in the balance-sheet positions of several private banks. The Federal Reserve and the European Central Bank are, therefore, maintaining an exceptionally easy policy stance, while envisaging gradually rising credit costs to reflect a an expected improvement of cyclical conditions, b fiscal policy changes, c trade balance effects on growth and employment, and d vastly different political circumstances in the U. Simply put, we failed to act both early enough and decisively enough to stem the credit excesses that spawned the financial crisis and the Great Recession. The results show that the exchange rate has played a significant role in the transmission mechanism, suggesting that the behavior of this variable should be carefully watched even under an inflation targeting regime. Still, it seems that these numbers don't look reassuring to those at the Fed fretting about the inflationary impact of "tight labor markets.
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Would countries beyond our borders really have been better off with a weaker U. In the longer term five to six monthsnet credit to the government becomes a function of the other monetary variables and affects inflation directly.
Apart from the usual demand-pull and cost-push pressures, at least five additional influences pose challenges for the conduct of monetary policy. I also want Monetary policy targeting in Central Europes transition economies book call attention to Terry Checki, who is being honored today and has been at the center of events in global finance for more than three decades, and who has done so much to shape them.
It is, instead, the Eurozone governments that must act. This is the case of changes in price setting that are related to overall economic liberalisation following central planning, as in the case of the Czech Republic, for example. From one perspective, the unconventional nature of recent U.
Since the economic outlook is uncertain, this means the timing of liftoff must also be uncertain. Another consideration is the search for a credible monetary regime in countries where efforts towards disinflation needed to be complemented by policy initiatives to liberalise prices in the course of structural reform.
The fundamental issue is whether U. Recent events are a reminder that U. There is no telling indeed where the contagion of Catalonia's separatist movement will stop in Europe's complicated political landscape. Monetary policy meant to suit everybody is likely in the end to suit nobody.
But, all in all, there is fairly compelling evidence for some countries under examination that inflation has become less volatile and persistent in the post IT period, interest rates have become less volatile and inflation expectations more responsive to monetary policy moves.
A more plausible outcome is the organic development of a new set of norms articulating principles both for the mechanisms by which central banks pursue price stability and for the governance of central banks themselves.
Based on the preliminary estimates for the third quarter, the U. An emphasis on the need to build credibility from the outset called for considerable emphasis in the early days of IT on upgrading internal analytical capabilities in most countries and on strengthening reporting and communications tools.
In sum, a stable relationship exists between the money supply and economic activity in Mongolia, which has made it possible for the monetary authorities to use a money-supply-growth rule to guide monetary policy.
If the improvement in the U. The German coalition talks are going nowhere, that's for sure. The good news is that many EMEs generally appear to be better equipped today to handle the Fed's prospective exit from its exceptional policy accommodation than they were during past tightening cycles.
Central banks have challenges enough in tailoring policies to their domestic circumstances.
Experience with monetary targeting in environments of unstable money demand also prompted countries, such as Indonesia, for example, to adopt IT.
Although this effort remains very much a work in progress, I think it will enable us to avoid repeating the mistakes of the past decade, and enable us to take a more proactive stance toward mitigating potential Monetary policy targeting in Central Europes transition economies book vulnerabilities.
We've taken important steps through new legislative mandates and a broader effort to rethink our regulatory and supervisory framework.Economic Activism: Europe’s Struggles with Monetary and Fiscal Policy. Share on Facebook can always be contextualized and discussed relative to fiscal and monetary policy.
This is true whether investment professionals find themselves in the aftermath of the Great Recession, in the next Nifty Fifty era, or if it is just another day of Author: Jason Voss, CFA.
literature on the determinants of monetary policy stance in EMEs. Sections 4 and 5 describe the econometric strategy, the data, and the results. Section 5 is devoted to caveats and robustness analyses, and we o⁄er concluding remarks in Section 6.
2 Determinants of Monetary Policy in Emerging Market Economies During Crises. Highlights We estimate monetary policy rules for six central and eastern European countries.
We take changes in the policy settings explicitly into account. The exchange rate impact is split up into two different components. In contrast to most empirical work our estimates satisfy the Taylor principle. The focus in most countries switched from defending the peg to targeting galisend.com by: successful monetary policy making.
The results show that pdf central bank independence started to influence inflation only after the initial transitional shocks. The next two papers analyze monetary transmission mechanisms in less advanced economies, choosing Georgia and Romania as examples.
The papers estimate structural models of inflation.Abstract. For download pdf years now, the more advanced transition economies of Central and Eastern Europe (CEECs) 1 have reached a new stage in their adaptation to market forces and convergence toward the structures and economic outcomes exhibited in Western Europe.
Growth has strengthened, inflation has been reduced markedly, and public and private institutions have been developed to provide the Cited by: Nov 17, · But certainly not all of them. And to understand the individual factors ebook their interactions better, I’ll ebook taking a closer look today at the causes of our monetary policy measures and their effects.
For the European Central Bank’s policy is often referred to as a cause of the current problems in the banking and financial sector.