Exchange Rate Pass-Through and Monetary Policy in Croatia

IMF Working Papers, June 1, 2002

Source details

Canonical URL

Exchange Rate Pass-Through and Monetary Policy in Croatia

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Authors: Leo Bonato, Andreas Billmeier
• Published: June 1, 2002
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451853223.001

Summary and main findings

• Exchange rate targeting is considered the best policy option in dollarized economies when wages and prices are indexed to the exchange rate.
• Croatia is a highly dollarized economy.
• Empirical investigation conducted in this paper shows that exchange rate pass-through has been low after stabilization.
• This finding is robust to different methodologies (VAR, cointegration).
• The low pass-through would suggest that dollarization is mostly limited to financial assets and therefore that strict exchange rate targeting may not necessarily be the best option.
• Policy implications are unclear due to the endogeneity of the pass-through to the policy regime.

Methodology and analytical approach

• Econometric analysis using VAR (Vector autoregression) and cointegration techniques.
• Time series analysis of exchange rate adjustments, exchange rate shocks, exchange rate movements, and pass-through to prices.
• Consideration of price indexes including retail price index and HWWA commodity price index across the distribution chain.

Policy implications and interpretation

• Low post-stabilization exchange rate pass-through suggests limited pass-through from exchange rates to wages and prices in Croatia.
• If dollarization is mostly limited to financial assets, strict exchange rate targeting may not necessarily be the optimal policy choice.
• The paper emphasizes that policy conclusions are constrained by the endogeneity of pass-through to the prevailing policy regime, making definitive policy prescriptions unclear.

Key statistics and publication metadata

• Authors: Leo Bonato, Andreas Billmeier
• Date: June 1, 2002
• Series: Working Paper No. 2002/109
• Issue: 109
• Volume: 2002
• Pages: 34
• DOI: https://doi.org/10.5089/9781451853223.001
• Stock No: WPIEA1092002
• ISBN: 9781451853223
• ISSN: 1018-5941

Exchange Rate Pass-Through and Monetary Policy in Croatia, IMF Working Papers, June 1, 2002.

Content in this bundle

• Exchange Rate Pass-Through and Monetary Policy in Croatia - WP/02/109
  • Exchange Rate Pass-Through and Monetary Policy in Croatia - WP/02/109 (Markdown version)
  • Exchange Rate Pass-Through and Monetary Policy in Croatia - WP/02/109 (PDF)