Exchange rate pass-through and monetary policy in Croatia

Exchange rate targeting is considered to be the best policy option in dollarized economies if wages and prices are indexed to the exchange rate. Croatia is a highly dollarized economy; however, our empirical investigation does not reveal a high exchange rate pass-through after stabilization. This fi...

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Bibliographic Details
Published inJournal of Comparative Economics Vol. 32; no. 3; pp. 426 - 444
Main Authors Billmeier, Andreas, Bonato, Leo
Format Journal Article
LanguageEnglish
Published San Diego Elsevier Inc 01.09.2004
Elsevier
Elsevier BV
SeriesJournal of Comparative Economics
Subjects
Comparative economics
Croatia
Economics
Exchange rates
Foreign exchange rates
Monetary policy
Pass through entities
Croatia
E31
F41
E52
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Summary:Exchange rate targeting is considered to be the best policy option in dollarized economies if wages and prices are indexed to the exchange rate. Croatia is a highly dollarized economy; however, our empirical investigation does not reveal a high exchange rate pass-through after stabilization. This finding is robust to different methodologies and suggests that dollarization is limited mostly to financial assets. Therefore, strict exchange rate targeting may not necessarily be the best policy option for Croatia. However, policy implications must be drawn with care due to the endogeneity of the pass-through to the policy regime. Journal of Comparative Economics 32 (3) (2004) 426–444.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0147-5967
1095-7227
DOI:10.1016/j.jce.2004.03.004