Special Symposium
Comparative Economic Studies (2006) 48, 458–479. doi:10.1057/palgrave.ces.8100180
Ex ante Dynamics of Real Effects of Monetary Policy: Theory and Evidence for Poland and Russia, 2001–2003
Wojciech W Charemza1,2 and Svetlana Makarova1,3
- 1National Bank of Poland, BBM, Warsaw, Poland
- 2University of Leicester, Leicester, UK. E-mail: wch@leicester.ac.uk
- 3European University at St Petersburg, St Petersburg, Russia
Abstract
This paper proposes a new indicator of the expected real effects of an inflation-targeting monetary policy. This indicator can be derived from a simple two-dimensional vector autoregressive model of inflation and the output gap. A simulation experiment illustrates its rationale for timing monetary decisions, if the control of output is a secondary policy target. Applied for Poland, this might have contributed to a policy that would have reduced Polish inflation in 2003 and increased output growth in 2004. We also show how this indicator can be applied for Russia
Keywords:
Monetary Policy, inflation targeting, Russia, Poland
JEL Classifications:
E470; E500; P2
