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Putting the Pieces Together: The Moldovan Exchange Rate Policy Puzzle

Research in Economics and Business: Central and Eastern Europe

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Field Value
 
Title Putting the Pieces Together: The Moldovan Exchange Rate Policy Puzzle
 
Creator Takagi, Shinji; Graduate School of Economics, Osaka University
Ciubotaru, Vitalie; Graduate School of Economics, Osaka University
 
Description This paper explores the Moldovan exchange rate policy puzzle: why the country has pursued a soft peg to the US dollar, despite the virtual absence of direct trade with the United States, increasing “euroisation” of the economy, and an inflation-targeting monetary policy regime. In an attempt to assess Moldovan exchange rate policy, the paper finds that while changes in both the US dollar exchange rate and the import-weighted exchange rate affect import prices, consumer prices are determined primarily by changes in the dollar exchange rate. It also finds that the Moldovan monetary authorities use the US dollar exchange rate as an instrument for responding to domestic price developments. Thus, the sensitivity of consumer prices to the dollar exchange rate, and systematic use of the dollar exchange rate as an instrument of monetary policy, constitute an important setting against which the dollar peg policy has been maintained.
 
Publisher Research in Economics and Business: Central and Eastern Europe
 
Contributor —
 
Date 2013-12-10
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
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Format application/pdf
 
Identifier http://rebcee.eu/index.php/REB/article/view/41
 
Source Research in Economics and Business: Central and Eastern Europe; Vol 5, No 1 (2013)
1736-9126
1736-9126
 
Language eng
 
Relation http://rebcee.eu/index.php/REB/article/view/41/40