Monetary Policy Transmission Mechanisms and Inflation in the Slovak Republic

27 Pages Posted: 14 Feb 2006

See all articles by Louis Kuijs

Louis Kuijs

World Bank; International Monetary Fund (IMF)

Date Written: May 2002

Abstract

This paper presents the results of an empirical analysis into monetary policy transmission mechanisms and inflation in the Slovak Republic. The estimated vector autoregression (VAR) model suggests that inflation is determined by changes in foreign prices, the exchange rate, and wage costs, with a modest effect of aggregate demand, in line with theory for small, open economies. Monetary policy is shown to affect inflation via these channels. Changes in money supply seem to have a modest but rapid impact on prices. The measured effect of interest rate changes is modest and gradual, although it appears to have become more important in recent years.

Keywords: Monetary policy, inflation, transmission mechanisms, transition

JEL Classification: C32, C51, E31, E52

Suggested Citation

Kuijs, Louis, Monetary Policy Transmission Mechanisms and Inflation in the Slovak Republic (May 2002). IMF Working Paper No. 02/80, Available at SSRN: https://ssrn.com/abstract=879602

Louis Kuijs (Contact Author)

World Bank ( email )

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Washington, DC 20433
United States

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
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