Monetary conditions index (MCI) is an indicator of the combined effect of short-term interest rates and the exchange rate on price stability and/or aggregate demand. The MCI enables monitoring of changes in the level of restrictiveness and/or expansiveness of monetary policy compared to the base...

Motivated by the theory that suggests that Serbian exporters bear a burden of “strong” dinar, this paper investigates the relationship between exchange rate and foreign trade. The contribution of this paper is the estimate of the long-run impact of exchange rate on exports and imports for...

This analysis aims to quantify features of exchange rate pass-through to inflation for Serbian economy. In summary of our results, ADL and recursive VAR methodologies confirm that pass-through effect in Serbia is relatively high, but, like in most countries, incomplete and well below one....

This paper estimates the pass-through effect of the exchange rate to prices in Serbia. Results obtained using ADL and VAR methodology suggest that the effect of exchange rate to inflation is Serbia is relatively high, but, as it is the case in most countries and previous studies on Serbia,...

We present a version of the exchange-rate regime model of inflation. We then use quarterly data from Mexico during 1946.I-1995.I to test and estimate a simultaneous equation model for wage inflation, price inflation and industrial produciton. In doing so, we respect the Lucas critique and take...

Existing models of self-fulfilling crises fail to explain both the onset and the abruptness of recent currency attacks. In this apper we follow the suggestion by Myerson (1998) that in games with a very large number of players 'a more realistic model should admit some uncertainty about the...

An ability to adequately assess the functioning of exchange rate regimes is crucial. Such an assessment will be based on a priori beliefs about how different regimes react to shocks and therefore which regime will be appropriate for a given economy. This paper contributes to this literature by...

The Fundamental Equilibrium Exchange Rate (FEER) method of calculating an equilibrium real exchange rate is the most widely used alternative to PPP. This paper presents the first comprehensive historical test of FEER calculations for six major economies, using estimates for the last twenty...

This paper reviews the monetary transmission mechanism in low income countries (LICs). We use monetary transmission in advanced and emerging markets as a benchmark to identify aspects of the transmission mechanism that may operate differently in LICs. In particular, we focus on the effects of...

The nominal exchange rate is both a macroeconomic variable equilibrating international markets and a financial asset that embodies expectations and prices risks associated with cross border currency holdings. Recognizing this, we adopt a joint macro-finance strategy to model the exchange rate....