Monetary Policy Transmission Mechanisms and Inflation in Slovakia

May 1, 2002

Preview Citation

Format: Chicago

Louis Kuijs. Monetary Policy Transmission Mechanisms and Inflation in Slovakia, (USA: International Monetary Fund, 2002) accessed November 21, 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 presents the results of an empirical analysis into monetary policy transmission mechanisms and inflation in the Slovak Republic. The estimated vector autoregression (VAR) model suggests that inflation is determined by changes in foreign prices, the exchange rate, and wage costs, with a modest effect of aggregate demand, in line with theory for small, open economies. Monetary policy is shown to affect inflation via these channels. Changes in money supply seem to have a modest but rapid impact on prices. The measured effect of interest rate changes is modest and gradual, although it appears to have become more important in recent years.

Subject: Currency markets, Exchange rates, Financial markets, Financial services, Foreign exchange, Inflation, Prices, Real exchange rates, Real interest rates

Keywords: Channel work, Core CPI, Currency markets, Exchange rate peg, Exchange rates, Inflation, Monetary policy, Monetary policy transmission mechanisms, Oil price, Output gap, Price, Price level, Real exchange rates, Real interest rates, Transition, Transmission mechanisms, Wage cost, WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2002/080
Stock No:

WPIEA0802002
ISBN:

9781451850314
ISSN:

1018-5941

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