Three potential pitfalls may beset Cyprus’s financial liberalisation programme. To avoid them, gaps in financial structures must first be identified and addressed; financial stability could be jeopardized in the absence of a broad variety of financial markets and financial institutions. Second,...

An integrated stochastic macroeconomic model of transition economy at the early stage of reforms with optimising representative risk averse agents is constructed. The equilibrium growth rate of the economy,real asset returns, domestic money demand, and expected inflation rate are determined as...

This paper examines the financial liberalization choices available to Cyprus on the road to EU membership. It argues that the central bank’s proposal of full and immediate liberalization of interest rates and capital inflows entails a number of hidden dangers for the stability of the...

Can central bank communication act as a complementary instrument when policymakers are facing boom-bust cycles? Against the background of the current discussion about introducing an additional instrument when dealing with asset price misalignments, we argue that one of the core instruments of...