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

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

Global Economy Journal (GEJ), 2017, vol. 17, issue 2, 1-10

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)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:wsi:gejxxx:v:17:y:2017:i:02:n:gej-2017-0008

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DOI: 10.1142/GEJ-2017-0008

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