Monetary and Exchange Rate Regimes Changes: The Cases of Poland, Czech Republic, Slovakia and Republic of Serbia

Kosta Josifidis (1) , Jean-Pierre Allegret (2) , Emilija Beker Pucar (1)

1 Faculty of Economics Subotica
2 GATE - Groupe d'analyse et de théorie économique

The paper explores (former) transition economies, Poland, Czech Republic, Slovakia and the Republic of Serbia, concerning abandonment of the exchange rate targeting and fixed exchange rate regimes and movement toward explicit/implicit inflation targeting and flexible exchange rate regimes. The paper identifies different subperiods
concerning crucial monetary and exchange rate regimes, and tracks the changes of specific monetary transmission channels i.e exchange rate channel, interest rate channel, indirect and direct influences to the exchange rate, with variance decomposition of VAR/VEC model. The empirical results indicate that Polish monetary strategy toward
higher monetary and exchange rate flexibility has been performed smoothly, gradually and planned, compared to the Slovak and, especially, Czech case. The comparison of three former transition economies with the Serbian case indicate strong and persistent
exchange rate pass-through, low interest rate pass-through, significant indirect and direct influence to the exchange rate as potential obstacles for successful inflation targeting in the Republic of Serbia.

Keywords: Exchange rate targeting; Inflation targeting; Intermediate exchange rate <br />regimes; Monetary transmission channels

Domains: Economics and Finance

Kosta Josifidis, Jean-Pierre Allegret, Emilija Beker Pucar. Monetary and Exchange Rate Regimes Changes: The Cases of Poland, Czech Republic, Slovakia and Republic of Serbia. Panoeconomicus, 2009, 58 (2), pp.199-226. ⟨10.2298/PAN0902199J⟩. ⟨halshs-00404729⟩