Capital Flows in a Transitional Economy and the Sterilization Dilemma: The Hungarian Case

August 1, 1996

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Pierre L. Siklos Capital Flows in a Transitional Economy and the Sterilization Dilemma: The Hungarian Case, (USA: International Monetary Fund, 1996) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper compares Hungary’s experience with sterilization with that of other capital inflow episodes. The study focuses on the short-run impact of sterilization on monetary policy. The empirical data indicate that sterilized interventions by the National Bank of Hungary (NBH) were not significant until mid-1994, sometime after the return to power of the former Communist leaders. Thus, in the second half of 1994, the NBH began to demonstrate more firmly its independence by tightening monetary policy. By the beginning of 1995, the direction of fiscal policy had begun to show consonance with the overall aims of monetary policy.

Subject: Balance of payments, Capital flows, Central banks, Demand for money, Foreign exchange, Monetary base, Money, Real exchange rates, Sterilization

Keywords: Asia and Pacific, Capital, Capital flows, Credit creation, Demand for money, Eastern Europe, Exchange rate, Monetary base, Monetary policies in the transitional economies, Monetary policy, Money stock, NBH data source, NBH governor, Proxy monetary policy action, Reaction function, Real exchange rates, South America, Sterilization, WP

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1996/086
Stock No:

WPIEA0861996
ISBN:

9781451850833
ISSN:

1018-5941

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