Monetary Transmission Mechanisms in Belarus
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Summary:
We explore monetary policy transmission by estimating VAR impulse response functions to illustrate the Belarusian economy's response to unexpected changes in policy and exogenous variables. We find a significant exchange rate pass-through to prices, and interest rate policy following, rather than leading, financial market developments. Our estimated monetary policy reaction function shows the central bank striking a balance between real exchange rate stability and containing inflation. We discuss dollarization, administrative interventions, and other features complicating monetary policy transmission, review specific constraints and vulnerabilities, and conclude with observations on possible measures that could raise the effectiveness of monetary policy in Belarus.
Series:
Working Paper No. 2006/246
Subject:
Currencies Dollarization Exchange rates Foreign exchange Inflation Monetary policy Money Prices Real exchange rates
English
Publication Date:
November 1, 2006
ISBN/ISSN:
9781451865066/1018-5941
Stock No:
WPIEA2006246
Pages:
22
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