The Exchange Rate, Prices and the Supply Response under Transition: A Simulation Study

Pavlos Karadeloglou, George Chobanov, Aleš Delakorda, Wladyslaw Milo and Piotr Wdowinski

Chapter 6 in Exchange Rate Policies, Prices and Supply-Side Response, 2001, pp 78-88 from Palgrave Macmillan

Abstract: Abstract Across the transition economies, both extensive liberalization as well as persistent stabilization efforts have been vital for improving economic performance. Liberalization involves freeing prices, trade and exit from state controls whereas stabilization means reducing domestic and external imbalances. An important issue related to liberalization and stabilization processes refers to the policy adopted for the determination of the exchange rate; that is, the choice of an appropriate exchange rate regime that would better serve these processes. The determination of an appropriate exchange rate is directly related to the objectives of the transition process. In particular, it influences the liberalization process by exposing domestic markets to world prices and the stabilization process through its contribution to external and internal balance.

Keywords: Exchange Rate; Real Exchange Rate; Real Wage; Transition Economy; Exchange Rate Flexibility (search for similar items in EconPapers)
Date: 2001
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DOI: 10.1057/9780230554535_6

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