Interest rates and structural shocks in European transition economies

European transition economies are still suffering from negative implications of economic crisis. Significant decrease in the key interest rates was followed by reduced maneuverability of central banks in providing incentives into real economies. Responsiveness of short-term interest rates to the structural shocks provides unique platform to investigate sources of their unexpected volatility and associated effects on monetary policy decision making. Moreover, sources of interest rates volatility may help to reveal side effects of the exchange rate regime choice. In the paper we analyze sources of the short-term nominal interest rates volatility in ten European transition economies by employing SVAR methodology. We observed unique patterns of the short-term interest rates responsiveness in countries with different exchange rate arrangements that contributes to the fixed versus flexible exchange rate dilemma.


Subject(s):
Issue Date:
2016-10-11T20:38:17Z
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/246042
Published in:
Business and Economic Horizons, Volume 10, Issue 4
Business and Economic Horizons
Page range:
305-306
Total Pages:
15
JEL Codes:
C32; E43; F41




 Record created 2017-04-01, last modified 2017-05-02

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)