Monetary policy options for transition economies

Abstract

Implementation of an adequate monetary policy regime in transition economies has provoked an active debate in the past decades. There was a tendency to try to reach a 'one-size-fits-all' solution. However, differences in macroeconomic performances and institutional development have led to different choices in terms of applied monetary regimes. This debate is ongoing since none of the monetary regimes is ideal. If there are reasonable doubts whether the choice of monetary regime a transition economy has made was optimal, it is eligible to reconsider available alternatives. This paper is a contribution to this ongoing debate. A lot of emphasis is sometimes given to the role of monetary policy in transition economies, with high expectations in terms of the capacity of the right choice of monetary regime to generate high levels of economic growth. However, institutional development substantially overshadows the importance of the choice of monetary regimes for economic success of transition economies.