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Exchange rate, inflation and real economic growth in transitive economies

Author

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  • Jaroslava Durčáková
  • Martin Mandel

Abstract

In this paper we discuss the issue of the choice of exchange rate regimes in transitive economies and the effect of exchange rate policy on the development of macroeconomic indicators (e. g. the average growth rate of real GDP in domestic currency, the development of domestic inflation and the real exchange rate). Our analysis indicates that monetary and exchange rate policy is not a passive factor, at least in the medium term. Monetary policy should, in the first phases of transformation development, warn against two extremes: absolute stability even appreciation of the nominal exchange rate, or, on the contrary, chronic and severe depreciation.

Suggested Citation

  • Jaroslava Durčáková & Martin Mandel, 2002. "Exchange rate, inflation and real economic growth in transitive economies," Prague Economic Papers, Prague University of Economics and Business, vol. 2002(2), pages 135-147.
    • Handle: RePEc:prg:jnlpep:v:2002:y:2002:i:2:id:192
    DOI: 10.18267/j.pep.192
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    References listed on IDEAS

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    4. Ofair Razin & Susan M. Collins, 1997. "Real Exchange Rate Misalignments and Growth," NBER Working Papers 6174, National Bureau of Economic Research, Inc.
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    7. Kocenda, Evzen, 1998. "Exchange rate in transition," MPRA Paper 32030, University Library of Munich, Germany.
    8. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72(6), pages 584-584.
    9. Krugman, Paul, 1989. "The Case for Stabilizing Exchange Rates," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 5(3), pages 61-72, Autumn.
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    Cited by:

    1. Yu Hsing, 2004. "Impacts of Macroeconomic Policies on Output in the Czech Republic: An Application of Romer's ISMP-IA Model," Prague Economic Papers, Prague University of Economics and Business, vol. 2004(4), pages 339-345.

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    More about this item

    Keywords

    economic growth; exchange rate; inflation; transitive economies;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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