This is my PHD thesis. It is currently work in progress. Any comments are more than welcomed.
The thesis covers the impact of the choice of monetary policy in a small open economy. Most papers regarding the monetary policy anaylse the impace of the conduct of monetary policy. This papers looks at the choice between stable and variable exchange rate regimes.
The main hypothesis of the thesis is that the actual choice of monetary policy between stable and variable exchange rate regime has major impact on the behavior of economic participants. The thesis has to main models: stable exchange rate model and variable exchange rate model. Behaviour of: households, firms, government, banks is investigated under each model and main differences are determined.
The model is tested on data for 10 countries: Bulgaria, Czech Republich, Croatia, Estonia, Hungary, Litva, Latvia, Romania, Slovenia, Slovakia. The model shows the choice of the exchange rate regime has a significant impact on monetary variables like household’s debt and foreign debt; but has minor or no impact on real variables like industrial production.
Download PHD thesis