Accommodating Monetary Policy in Transitional Economies: Particularities

Tatiana Papiashvili () and Faruk Gürsoy ()
Additional contact information
Tatiana Papiashvili: International Black Sea University
Faruk Gürsoy: International Black Sea University

IBSU Scientific Journal, 2008, vol. 2, issue 1, 23-32

Abstract: This paper surveys the particularities of monetary policy as a powerful governmental weapon in countries with transitional economies. The paper combines the theoretical analysis with empirical studies. Because in transitional economies the particular channels of monetary policy are diverse, continually changing, and uncertain reduce-form evidence are used to evaluate the empirical evidence. The brief view of relationships between movement in money supply (M1 and M2) and output level (nominal GDP) in Georgia illustrates the close correlation between them. Georgian economy like others transitional economies suffers from "Great Transitional Depression" and macroeconomic equilibrium occurs at recessionary gap. In transition countries initially supply is more elastic and elasticity increases more rapidly than that in developed countries. In these circumstances expansionary monetary policy effects real aggregate economy stimulating economic growth with mild inflation. In industrialized countries accommodating discretionary monetary policy entails cost-push inflation without any change in long-run GDP.

Keywords: monetary policy; transitional economy; reduce-form evidence; long-run economic growth; inflation (search for similar items in EconPapers)
JEL-codes: E50 E52 (search for similar items in EconPapers)
Date: 2008
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journal.ibsu.edu.ge/index.php/ibsusj/article/download/49/42 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ibl:journl:v:2:y:2008:i:1:p:23-32

Access Statistics for this article

IBSU Scientific Journal is currently edited by Giuli Alasania

More articles in IBSU Scientific Journal from International Black Sea University Contact information at EDIRC.
Bibliographic data for series maintained by Salavat Sayfullin ().