This paper studies the economy of Hong Kong through the lens of a small open economy DSGE model with a currency board exchange rate commitment. It assumes flexible prices and a banking system that provides credit to entrepreneurial household-firms; the money supply is fully backed by reserves...

This paper presents an overview of the channels of monetary transmission and their manifestation in Bulgaria - a country in a currency board arrangement - in the first five years after the introduction of the regime. The presence of such a mechanism of transmission requires some form of...

Monetary policies and adjustments during a financial crisis depend on policy-makers' conceptions on what money is and how it works. There is sufficient consensus among scholars that money is an institution created within the economic system and is in line with other institutions that regulate...

In the years 2004-2014 the Lithuania's exchange rate policy was based on a rigid currency board system. After a period of uncontested success in the fight against inflation in the first decade of the transition and economic growth, entering the ERM II in 2004 and efforts to adopt the euro were...

This paper focuses on explaining the economic fluctuations in Bulgaria after the introduction of the currency board arrangement in 1997, the period of macroeconomic stability that ensued, the EU accession, and the episode of the recent global financial crisis. This paper follows Chari et al....

Fredrik Andersson and Lars Jonung describe Iceland's economy and list the possible currency regimes. They ask which is the best monetary policy regime for Iceland and conclude that a flexible exchange rate with an inflation target can be ruled out because such a system has served as a shock...

This paper focuses on explaining the economic fluctuations in Bulgaria after the introduction of the currency board arrangement in 1997, the period of macroeconomic stability that ensued, the EU accession, and the episode of the recent global financial crisis. This paper follows Chari et al....

In the years 2004-2014 the Lithuania's exchange rate policy was based on a rigid currency board system. After a period of uncontested success in the fight against inflation in the first decade of the transition and economic growth, entering the ERM II in 2004 and efforts to adopt the euro were...

In the years 2004-2014 the Lithuania’s exchange rate policy was based on a rigid currency board system. After a period of uncontested success in the fight against inflation in the first decade of the transition and economic growth, entering the ERM II in 2004 and efforts to adopt the euro were...

In this paper, an econometric model of consumption in Bulgaria for the period 1997-2005 is constructed. The Error-Correction Model (ECM) approach is employed and long-run relationship between household consumption and income was found. The primary purpose of this empirical paper is to get a...

The 14 Pacific developing member countries (DMCs) of the Asian Development Bank (ADB) have opted for very different exchange rate regimes with varying degrees of flexibility. Whereas several microstates have adopted an external currency as their legal tender, others have decided to use a basket...

In this paper, an econometric model of consumption in Bulgaria for the period 1997-2005 is constructed. The Error-Correction Model (ECM) approach is employed and long-run relationship between household consumption and income was found. The primary purpose of this empirical paper is to get a...

Nous proposons une étude empirique analysant le lien entre un régime monétaire et les pratiques monétaires informelles, tous deux se situant dans le cadre du système monétaire d'un pays, celui du "Currency Board" à Djibouti. Les résultats économétriques, de différents tests de...

This Article 2008 IV Consultation highlights that Bosnia and Herzegovina’s economy has been exhibiting robust growth, but imbalances have emerged. The current account deficit has widened and underlying inflation has picked up. Procyclical fiscal policy has added to these imbalances....

Cambodia's economic and social achievements over the past ten years have been the most impressive in its history. Nevertheless, Cambodia today is still as dollarized, if not more so, than it was ten years ago. What is this so, and what, if anything, should the Government do? This paper attempts...

A currency board combines three elements: a fixed exchange rate between a country’s currency and an “anchor currency,” automatic convertibility, and a long-term commitment to the system, often made explicit in the central bank law. The main reason for countries to consider a currency board...

Under a currency board the central bank relinquishes control over its monetary policy and domestic interest rates converge toward the foreign rates. Nevertheless a spread between both usually remains. This spread can be persistently positive due to increased risk in the economy. This paper...

The article is a review on Djibouti’s Extended Credit Facility (ECF) program and the performance of economic development in the program. The ECF program helped Djibouti to maintain macroeconomic stability, and the period underwent a transformation in the Djiboutian economy. The country...

Dominica has faced two major challenges during the past two decades: weak competitiveness and low potential growth. In addition to these economic challenges, the country has been facing frequent natural disasters. Growth is expected to pick up gradually. The financial system is highly liquid but...

This 2013 Article IV Consultation IMF staff report focuses on measures that are being undertaken to rebalance macroeconomic growth in Lithuania. The IMF report discusses the requirement of fiscal consolidation to fully rebuild fiscal space. It highlights the important role played by the...

Currency boards operate differently from standard pegs. The former exhibit greater currency stability and lower transaction costs, inflation, and nominal interest rates, but are limited in their use of devaluation. We extend Drazen and Masson's (1994) signaling model to consider the choice...

The aim of this paper is to examine the monetary policy actions through which the central banks in the Sub-Saharan African countries have searched to eliminate the negative impacts of the shocks facing their economies. We compare two types of monetary policy regimes: a currency board regime (in...

A currency board combines three elements: a fixed exchange rate between a country’s currency and an “anchor currency,” automatic convertibility, and a long-term commitment to the system, often made explicit in the central bank law. The main reason for countries to consider a currency board...

The authors investigate the patterns and determinants of the currency risk premium in two currency boards-Argentina and Hong Kong. Despite the presumed rigidity of currency boards, currency premium is almost always positive and at times very large. Its term structure is usually upward sloping,...

In economic discussions, currency board systems are frequently described as arrangements with self-binding character to the monetary authorities by their strict rules and establishments by law. Hard pegs and especially currency boards are often seen as remedies to overcome economic and financial...

The theory of international economy does not provide an unambiguous answer to the question which exchange rate regime is optimal for a certain country. Faced with macroeconomic instability, high inflation expectations and poor growth, a number of European transition economies have opted for the...

In this article we ask why in the process of the formation of the common currency the necessary mechanisms were not incorporated in order to resolve crisis like this. Our hypothesis is that, contrary to what is often said, the euro has followed a model approaching that of the reforced...

Current economic crisis in Serbia was triggered primarily by pre-transitional structural instabilities and stressors influenced by uncompleted transition, both geopolitical and economic.The fact that macroeconomic policies (monetary and fiscal, primarily) did not manage to fix these problems...