Macroeconomic Implications of the Transition to Inflation Targeting and Capital Account Liberalization in Romania

Author/Editor:

Nikolay Gueorguiev ; Pelin Berkmen

Publication Date:

December 1, 2004

Electronic Access:

Free Full text (PDF file size is 990 KB).Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

In the near future, Romania will introduce inflation targeting and fully liberalize its capital account. This paper aims to analyze, in a dynamic general-equilibrium model with sticky prices and monopolistic competition, how these two profound changes will affect the ability of monetary policy to pursue its objective of price stability. In particular, the resilience of the current and future monetary policy regimes to shocks is evaluated against two welfare criteria: a standard central bank loss function containing the deviations of inflation, output, and the real exchange rate from their equilibrium values, and the compensating variation measure of Lucas (1987).

Series:

Working Paper No. 04/232

Subject:

English

Publication Date:

December 1, 2004

ISBN/ISSN:

9781451875591/1018-5941

Stock No:

WPIEA2322004

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

35

Please address any questions about this title to publications@imf.org