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Exchange rate policies during transition from plan to market

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  • Dariusz Rosati

Abstract

This paper reviews the exchange rate policies adopted in the early years of transition, paying attention to the dilemmas concerning the degree of convertibility, the initial choice of exchange rate regime and the required scale of devaluation. The initial liberalization and devaluation were then followed by a period of real exchange rate appreciation, which was accompanied by improving export performance; this second phase has policy implications that are briefly discussed. Throughout, a key constraint is the inability of the central bank to target simultaneously monetary aggregates, interest rates and the exchange rate. In the presence of large capital inflows the authorities have to manage the exchange rate and domestic monetary policy in order to keep inflation acceptably low while maintaining international competitiveness.

Suggested Citation

  • Dariusz Rosati, 1996. "Exchange rate policies during transition from plan to market," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(1), pages 159-184, May.
    • Handle: RePEc:bla:etrans:v:4:y:1996:i:1:p:159-184
    DOI: 10.1111/j.1468-0351.1996.tb00167.x
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    References listed on IDEAS

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    1. Halpern, László & Wyplosz, Charles, 1995. "Equilibrium Real Exchange Rates in Transition," CEPR Discussion Papers 1145, C.E.P.R. Discussion Papers.
    2. Jeffrey Sachs, 1992. "The Economic Transformation of Eastern Europe: The Case of Poland," The American Economist, Sage Publications, vol. 36(2), pages 3-11, October.
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    Cited by:

    1. Balázs ÉGERT & Kirsten LOMMATZSCH, 2010. "Equilibrium Real Exchange Rates in Acceding Countries: How Large is Our Confidence (Interval)?," EcoMod2004 330600047, EcoMod.
    2. Balázs Égert & László Halpern & Ronald MacDonald, 2006. "Equilibrium Exchange Rates in Transition Economies: Taking Stock of the Issues," Journal of Economic Surveys, Wiley Blackwell, vol. 20(2), pages 257-324, April.
    3. Balázs Égert & Kirsten Lommatzsch, 2005. "Equilibrium Exchange Rates in the Transition: The Tradable Price-Based Real Appreciation and Estimation Uncertainty," Springer Books, in: Paul J.J. Welfens & Anna Wziątek-Kubiak (ed.), Structural Change and Exchange Rate Dynamics, pages 205-239, Springer.
    4. Paul G. Hare, 2000. "Trade Policy during the Transition. Lessons from the 1990s," CERT Discussion Papers 0006, Centre for Economic Reform and Transformation, Heriot Watt University.
    5. Samuel Guérineau & Sylviane Guillaumont Jeanneney, 2002. "Un indicateur d'ancrage nominal par le taux de change : illustration par le cas polonais," Economie & Prévision, La Documentation Française, vol. 154(3), pages 139-155.
    6. Balázs Égert, 2005. "The Balassa‐Samuelson Hypothesis in Estonia: Oil Shale, Tradable Goods, Regulated Prices and Other Culprits," The World Economy, Wiley Blackwell, vol. 28(2), pages 259-286, February.
    7. Samuel GUERINEAU, 1998. "Construction and Assessment of a Mixed Exchange Policy Indicator: Explanation of Polish Inflation," Working Papers 199818, CERDI.
    8. Marek Dabrowski, 1999. "Disinflation, Monetary Policy and Fiscal Constraints. Experience of the Countries in Transition," CASE Network Reports 0016, CASE-Center for Social and Economic Research.
    9. Lommatzsch, Kirsten & Tober, Silke, 2004. "What is behind the real appreciation of the accession countries' currencies?: An investigation of the PPI-based real exchange rate," Economic Systems, Elsevier, vol. 28(4), pages 383-403, December.
    10. Jordi Pons & Ma Lacasta, 2003. "Exchange rate and long run equilibrium in transition economies," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 9(1), pages 35-47, February.
    11. repec:onb:oenbwp:y::i:106:b:1 is not listed on IDEAS
    12. repec:zbw:bofitp:2004_009 is not listed on IDEAS
    13. Egert, Balazs, 2002. "Estimating the impact of the Balassa-Samuelson effect on inflation and the real exchange rate during the transition," Economic Systems, Elsevier, vol. 26(1), pages 1-16, April.
    14. Lucjan T. Orlowski, 1996. "The Path of Exchange Rates in the Polish Economic Transformation," CASE Network Studies and Analyses 0090, CASE-Center for Social and Economic Research.
    15. Daviddi, Renzo & Ilzkovitz, Fabienne, 1997. "The Eastern enlargement of the European Union: Major challenges for macro-economic policies and institutions of Central and East European countries," European Economic Review, Elsevier, vol. 41(3-5), pages 671-680, April.

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