Exchange Rate Pass-Through in Transition Economies: The Case of Republic of Macedonia

Besnik Fetai ()

Transition Studies Review, 2013, vol. 20, issue 3, 309-324

Abstract: This paper investigates the relative costs and benefits associated with introducing a different exchange rate regime in the Republic of Macedonia. In this finding, all econometrics results, using different methodologies (SVAR and VECM), show that introducing a different strategy of the exchange rate targeting in order to promote rapid economic growth could easy disturb macroeconomic stability (after having achieved it at a substantial cost) without any significant economic benefits. In the long term, the coefficient of exchange rate reveals that a 1 % change in the exchange rate will generate an increase in the prices level of 0.52 %, indicating that 52 % of changes in the exchange rate feed into the prices level. The investigation suggests that introducing a different strategy of the exchange rate regime is likely to incur more costs than benefits. Copyright CEEUN 2013

Keywords: Exchange rate; Pass-through effect; SVAR and VECM; E44; E55; E62; E77 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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Working Paper: Exchange Rate Pass-Through in Transition Economies: The Case of the Republic of Macedonia (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:spr:trstrv:v:20:y:2013:i:3:p:309-324

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DOI: 10.1007/s11300-013-0296-0

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