Macroeconomic Implications of the Transition to Inflation Targeting and Capital Account Liberalization in Romania
IMF Working Papers, December 1, 2004
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- Macroeconomic Implications of the Transition to Inflation Targeting and Capital Account Liberalization in Romania
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Bibliographic details
- Authors: Nikolay Gueorguiev, Pelin Berkmen
- Published: December 1, 2004
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451875591.001
Authors and Publication
- By Nikolay Gueorguiev, Pelin Berkmen
- December 1, 2004
- IMF Working Papers, Working Paper No. 2004/232
- Issue: 232
- Volume: 2004
- Pages: 35
- DOI: https://doi.org/10.5089/9781451875591.001
- ISBN: 9781451875591
- ISSN: 1018-5941
- Stock No: WPIEA2322004
Research Objective and Model
- Objective:
- Analyze how the introduction of inflation targeting and full liberalization of the capital account in Romania will affect the ability of monetary policy to pursue price stability.
- Model framework:
- Dynamic general-equilibrium model with sticky prices and monopolistic competition.
- Comparative evaluation:
- Resilience of current and future monetary policy regimes to shocks is evaluated.
Welfare Criteria Used
- Standard central bank loss function containing the deviations of:
- inflation,
- output,
- the real exchange rate
from their equilibrium values.
- Compensating variation measure of Lucas (1987).
Key Topics and Subjects
- Capital controls
- Consumption
- Exchange rates
- Inflation
- Real exchange rates
Keywords
- exchange rate
- inflation targeting
- interest rate
- WP
Main Analytical Focus and Implications (as described in the paper)
- Examine interactions between:
- transitioning to an inflation-targeting regime, and
- full capital account liberalization.
- Evaluate policy resilience to shocks within the modeled environment (sticky prices, monopolistic competition).
- Use of two welfare metrics to assess monetary policy performance under alternative regimes.
Source: IMF Working Paper "Macroeconomic Implications of the Transition to Inflation Targeting and Capital Account Liberalization in Romania" by Nikolay Gueorguiev and Pelin Berkmen, December 1, 2004.