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ECB Monetary Policy Actions and the Economic Conditions of a Non-Euro Member: The Case of Croatia

Berisha Edmond ()
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Berisha Edmond: School of Business, Fairmont State University, Fairmont, WV 26554, USA

Global Economy Journal, 2017, vol. 17, issue 2, 10

Abstract: This paper analyses the importance of ECB monetary policy shocks in the domestic activities of a non-EMU member, Croatia, with the main focus on the inflation rate. Using a Vector Autoregressive Model with an exogenous variable specification, it is found that the contraction of foreign monetary shocks have a significant positive impact on the local inflation rate and output. Interestingly, the interest rate gap exerts a statistically significant effect on the economic activities of Croatia, suggesting that targeting exchange rate stability does not eliminate the significance of ECB’s monetary policy changes.

Keywords: ECB; CNB; inflation; output; VAR (search for similar items in EconPapers)
JEL-codes: E42 E43 E52 (search for similar items in EconPapers)
Date: 2017
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