Publication details

The impact of exchange rate changes on inflation in the V4 countries in the process of economic transition

Authors

ŽÍDEK Libor NĚMEC Daniel

Year of publication 2013
Type Article in Proceedings
Conference Proceedings of the 31st International Conference Mathematical Methods in Economics 2013
MU Faculty or unit

Faculty of Economics and Administration

Citation
Web MME 2013 Proceedings
Field Economy
Keywords V4 countries; exchange rate pass-through; structural vector autoregression model; economic transition; inflation
Attached files
Description Our contribution focuses on the role of the exchange rate changes in the V4 countries during the transition process towards a market economy. Regarding the variety of exchange rate regimes implemented in the V4 countries at the start of the economic transition, we are especially interested in the degree of exchange rate pass-through to the domestic inflation in these countries. The respective countries followed different exchange rate strategies. The fixed exchange rate regime was applied in Czechoslovakia. Crawling peg was used in Hungary and Poland. And floating and fixed exchange rate with large band were applied in the new century. We have compared the impacts of the different exchange rate regimes on the price sta-bility during the transformation process. The effects were examined using country specific SVAR models and corresponding historical shock decompositions. We found out that the exchange rate indeed played important role in the price stability but the specific impact is highly individual.
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