Two Targets, Two Instruments: Monetary and Exchange Rate Policies in Emerging Market Economies

Ostry, Jonathan D.; Ghosh, Atish R.; Chamon, Marcos

doi:10.5089/9781475503623.006

Cited by 114 publications

(93 citation statements)

References 16 publications

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“…8 Despite numerous challenges, the Serbian financial sector is stable and resistant to turbulences coming from the local and international environment, as confirmed by the stress-testing, which the National Bank of Serbia conducts regularly (quarterly), applying extremely unfavorable scenarios. 9 Banks in Serbia have a satisfactory level of liquidity, as confirmed by the movements of main liquidity ratios and the maturity structure of assets.…”

Section: Stability Of the Financial System Is Preserved Results Of Tmentioning

confidence: 99%

Central bank policy after the crisis: Example of Serbia

Tabaković¹

2017

Ekonomika preduzeca

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SažetakCilj ovog rada bio je da se detaljnije sagleda kako se nakon krize, u uslovima prisutnih volatilnosti na međunarodnom finansijskom i robnom tržištu, aktivno menjala i prilagođavala monetarna politika Narodne banke Srbije, kao i u kojoj meri smo bili uspešni u ostvarivanju zakonskog mandatacenovne i finansijske stabilnosti. Posebno je analizirano da li su instrumenti koje je Narodna banka Srbije koristila nakon svetske ekonomske krize, posebno nakon 2012. godine, bili primereni uspešnom ostvarivanju ovih ciljeva, a uvažavajući aktuelna i očekivana tržišna kretanja.Postignuta i očuvana cenovna i finansijska stabilnost u uslovima prisutnih rizika iz međunarodnog okruženja nedvosmisleno upućuju da je primenjeni okvir monetarne i makroprudencijalne politike Narodne banke Srbije bio adekvatno postavljen i da je dao željene rezultate. Preko svih ključnih kanala transmisije -pad kamatnih stopa na nove i postojeće kredite, veća dostupnost kredita i rast kreditne aktivnosti, obezbeđena relativna stabilnost deviznog kursa i usidrenost inflacionih očekivanja -monetarna politika bitno je doprinosila povoljnijim uslovima za poslovanje i investiranje, za potrošnju i štednju stanovništva, a samim tim i ekonomskom rastu na održivim osnovama.Ključne reči: monetarna politika, stabilnost cena, finansijska stabilnost, referentna stopa. AbstractThe aim of this paper is to provide a detailed analysis of how the monetary policy of the National Bank of Serbia has been conducted, actively changed and adjusted in the post-crisis period, particularly in the circumstances of increased volatilities in international financial and commodity markets, and also to what extent we have been successful in achieving the legislative mandates -price and financial stability. Particular assessment was made as to whether the instruments that the National Bank of Serbia has used after the global economic crisis, especially after 2012, were appropriate in succesful achieving of those objectives, taking into account current and expected market developments.Achieving and preserving price and financial stability, though facing headwinds from the international environment, undoubtedly confirm that the current framework of monetary and macroprudential policy of the National Bank of Serbia was properly applied and that it delivered desired results. Through all key channels of transmission -the decline in interest rates on new and existing loans, increased availiability of loans and accelerated credit activity, provided relative stability of the exchange rate and well anchored inflation expectations -monetary policy contributed to more favorable business and investment conditions, household consumption and saving, and therefore to sustainable economic growth.

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Section: Stability Of the Financial System Is Preserved Results Of Tmentioning

confidence: 99%

Central bank policy after the crisis: Example of Serbia

Tabaković¹

2017

Ekonomika preduzeca

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“…Adler and Tovar (2011) found that for emerging markets during the episodes of pressure on the national currency, interventions cannot significantly affect the level of the exchange rate. In a survey on the effectiveness of currency interventions in emerging markets, Ostry, Ghosh, and Chamon (2012) found that the evidence on the efficacy of interventions in emerging market economies is mixed.…”

Section: The Inefficacy Of the Currency Interventions Of Bank Of Russiamentioning

confidence: 99%

The “Sudden” Transition to the Free Floating Exchange Rate Regime in Russia in 2014

Gilenko¹

2017

J. Rev. Global Econ.

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Abstract:The events of the fall of 2014 in the Russian currency market forced Bank of Russia to change the exchange rate regime in the national economy. In this study we show that in 2014 the regulator was trying to protect ruble (the Russian national currency) against a massive speculative attack, actively spending its international reserves, but the interventions proved quite ineffective. Moreover, the peculiarity of the structure of these reserves dictated a very limited range of maneuver for the central bank, forcing it to switch to the free floating exchange rate regime in the first half of November, 2014 -an important event, which, actually, could have been predicted by the lay experts on the basis of publically available information and application of simple econometric models. Noteworthy to say that, although not expectedly to the lay population, this switch of the exchange rate regime was done by Bank of Russia quite timely.

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“…Inflation targeting frameworks can help stabilize business cycles provided medium-term inflation expectations remain anchored and central banks are able to change short-term interest rates without triggering offsetting shifts in long-term interest rates (Lane 2003). Ostry, Ghosh, and Chamon (2012).…”

Section: Figure 18 Fiscal Policy Buffersmentioning

confidence: 99%

Slowdown in Emerging Markets: Rough Patch or Prolonged Weakness?

Didier¹,

Köse

Ohnsorge

et al. 2016

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: Emerging markets (EM) face their fifth consecutive year of slowing growth and a possibly longer period of sluggish performance than previously thought. This paper presents a comprehensive analysis of the nature of and the appropriate policy responses to the growth slowdown in EM. It reports three main results. First, the slowdown is synchronous and protracted, affecting a sizable number of EM, especially large ones. Second, it has been driven by both external factors, including weak world trade, low commodity prices, and tightening financial conditions; and domestic factors, including slowdown in productivity growth, bouts of policy uncertainty, and an erosion of policy buffers. Both structural and cyclical factors have contributed to the slowdown. Third, the room for accommodative cyclical fiscal and monetary policies is limited in many EM, lending urgency to putting in place structural reforms to upgrade governance structures, improve business environments, raise human and physical capital, and manage demographic pressures. JEL Classification Numbers: E60, F6, F43, O4, O43. Terms of use: Documents in

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Two Targets, Two Instruments: Monetary and Exchange Rate Policies in Emerging Market Economies

Cited by 114 publications

References 16 publications

Central bank policy after the crisis: Example of Serbia

Central bank policy after the crisis: Example of Serbia

The “Sudden” Transition to the Free Floating Exchange Rate Regime in Russia in 2014

Slowdown in Emerging Markets: Rough Patch or Prolonged Weakness?

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