Credibility of the Exchange Rate Policy in Transition Countries

Exchange rate policy is one of the most important aspects of economic policy during transition, and its credibility is often crucial for the success or failure of different policy actions. The goal of the project was to try to measure this parameter in the transition context. This was achieved by examining the developments in monetary policy in transition countries, by enhancing the measurement methods, and by improving the understanding of the major factors influencing policy credibility during transition.
The theoretical framework of the project rested on the rules vs. discretion literature of the last 20 years. The model connects inflationary expectations with exchange rate policy announcements. The data covered as many transition countries as possible.
The activities on the project included literature search, background reading, and data collection and processing.
The CLS team prepared the chapters describing the exchange rate environments in Bulgaria, Estonia, Latvia and Lithuania. The report was printed by CASE: "Credibility of the exchange rate policy in transition countries", Center for Social and Economic Research (CASE), Report No. 38, Warsaw 2001. Internet:

Period: October 1999 - January 2001
Coordinators: Georgy Ganev
Financing Organisations: Freedom House
Economic Perspectives