Monetary Policy in Transition: The Case of Mongolia

Torsten Sloek

No 2000/021, IMF Working Papers from International Monetary Fund

Abstract: This paper analyzes monetary policy in transition. It examines the dynamics of monetary policy in Mongolia using granger-causality tests for monetary variables and inflation. The paper also analyzes money demand using data from 22 Mongolian regions during 1993-1998. The analyses confirm the key role of monetary policy in stabilization and reveal that even in a transition economy as rudimentary as Mongolia, a stable money demand and a predictable relationship between inflation and monetary variables do exist. Hence market-based monetary policy is effective. In addition, the analysis points to a difference between transition and industrial economies in the elasticity of money demand with respect to activity, reflecting the larger role for transactions demand for money.

Keywords: WP; Mongolia; interest rate; money supply; inflation process; Money demand; Transition economies; income elasticity; money demand elasticity; money demand relationship; money demand elasticities in Mongolia; money demand analysis; way monetary policy function; money demand estimation; transition economy; role monetary policy; Demand for money; Inflation; Exchange rates; Personal income; Monetary base; Eastern Europe; Central and Eastern Europe; Baltics; Europe; Global (search for similar items in EconPapers)
Pages: 19
Date: 2000-01-01
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