Credibility of CIS Exchange Rate Policies
THE PERIPHERY OF THE EURO: MONETARY AND EXCHANGE RATE POLICY IN CIS COUNTRIES, pp. 111-143, Ashgate, 2005
Posted: 25 Jul 2007
Stabilizing the exchange rate is a major monetary policy goal in a number of CIS countries. Based on a microstructure model of the foreign exchange market with heterogenuous and technical traders we classify the de facto exchange rate management and derive a market based measure of the credibility of these exchange rate regimes. In our empirical analysis we compare the exchange rate policies of Belarus, Kazakhstan, Russia and Ukraine with the benchmark of three potential candidates for an EU accession, namely Bulgaria, Romania and Turkey. Our results indicate that markets assign a relatively high degree of credibility to the exchange rate management of the CIS countries. The paths to credibility, however, were quite different.
JEL Classification: D84, E42, F31
Suggested Citation: Suggested Citation