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Optimal Monetary Policy Framework in an Emerging Market Economy under Sanctions Pressure and Restrictions on Capital Flows

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  • Kharitonchik Anatoly

    (Belarusian Economic Research and Outreach Center (BEROC), Olimpiečių gatvė 1-6A, Vilnius, 09200, Lithuania)

Abstract

The study evaluates the effectiveness of monetary policy regimes that can serve as the basis for economic policy strategies in emerging economies. Based on the macroeconomic gap model for Belarus, simulations of the strong shock impact on the economy using different monetary policy regimes have been implemented. The effects of capital flow restrictions on the stabilization capacity of monetary policy regimes have been examined. Given the existing sanctions and internal capital controls, the most preferable regime for Belarus is a flexible inflation targeting. In transforming the economy and political system towards the inclusivity of political and economic institutions, applying a flexible price-level targeting can be considered.

Suggested Citation

  • Kharitonchik Anatoly, 2024. "Optimal Monetary Policy Framework in an Emerging Market Economy under Sanctions Pressure and Restrictions on Capital Flows," Central European Economic Journal, Sciendo, vol. 11(58), pages 329-345.
    • Handle: RePEc:vrs:ceuecj:v:11:y:2024:i:58:p:329-345:n:1022
    DOI: 10.2478/ceej-2024-0022
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    References listed on IDEAS

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    More about this item

    Keywords

    monetary policy; inflation; price level; interest rate; gap model;
    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
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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