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ECB Monetary Policy Actions and the Economic Conditions of a Non-Euro Member: The Case of Croatia

Author

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  • Edmond Berisha

    (School of Business, Fairmont State University, Fairmont, WV 26554, USA)

Abstract

This paper analyses the importance of ECB monetary policy shocks in the domestic activities of a non-EMU member, Croatia, with the main focus on the inflation rate. Using a Vector Autoregressive Model with an exogenous variable specification, it is found that the contraction of foreign monetary shocks have a significant positive impact on the local inflation rate and output. Interestingly, the interest rate gap exerts a statistically significant effect on the economic activities of Croatia, suggesting that targeting exchange rate stability does not eliminate the significance of ECB’s monetary policy changes.

Suggested Citation

  • Edmond Berisha, 2017. "ECB Monetary Policy Actions and the Economic Conditions of a Non-Euro Member: The Case of Croatia," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 17(2), pages 1-10, June.
    • Handle: RePEc:wsi:gejxxx:v:17:y:2017:i:02:n:gej-2017-0008
    DOI: 10.1142/GEJ-2017-0008
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    Keywords

    ECB; CNB; inflation; output; VAR;
    All these keywords.

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