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Analysis of Foreign Imbalances and Exchange Rate Policy in the Romanian Economy

Author

Listed:
  • Scutaru, Cornelia

    (Institute for Economic Forecasting, Bucharest)

  • Iordan, Mioara

    (Institute for Economic Forecasting, Bucharest)

  • Stanica, Cristian

    (Institute for Economic Forecasting, Bucharest)

  • Pauna, Bianca

    (National Institute of Economic Research, Bucharest)

Abstract

Considering the previous year's results, the paper re-addresses the issue of inflationary shocks dynamics and the dynamics of the foreign imbalance - induced shocks. The ideea of a correlation between the foreign imbalances and the output gap was first introduced by Acad. Emilian Dobrescu (2004) and provides an answer to certain behaviors specific to the Romanian transition economy. The paper presents an econometric analysis of the foreign imbalances and exchange rate policies, on the basis of certain short-term error-correcting econometric models (mothly data series) that reveal the correlations between the output gap and the foreign and exchange rate imbalances, the adjustment speed to the long-term balance, as well as the reaction towards the stability condition. At this stage, the previous year's results are used .

Suggested Citation

  • Scutaru, Cornelia & Iordan, Mioara & Stanica, Cristian & Pauna, Bianca, 2006. "Analysis of Foreign Imbalances and Exchange Rate Policy in the Romanian Economy," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 3(4), pages 38-54, December.
    • Handle: RePEc:rjr:romjef:v:3:y:2006:i:4:p:38-54
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    More about this item

    Keywords

    foreign imbalances; output gap; exchange rate policy;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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