Importing Credible Monetary Policy: A Way for Transition Economies to Fight Inflation?

In the 1990s, transition economies were rearranging their monetary regimes. This paper compares the chosen regimes based on the level of discretionary power and the ability to control inflation. Results show that non-discretionary regimes produce lower and more stable inflation.

Non-discretionary monetary policy: The answer for transition economies?

It is a well-established fact that monetary institutions help shape the macroeconomic environment of countries by stabilizing prices. In the early 1990s, transition economies had the opportunity to rearrange their monetary institutions to better achieve low levels of inflation. Those economies had several prominent monetary arrangements to choose from, such as sovereign central banks or currency boards. This paper surveys the monetary institutions currently in place in several transition economies and compares them based on their ability to control inflation. More specifically, we intend to test whether the transition economies have better inflation performance when they import the monetary policy of a credible central bank. --Transition economies,currency board,European monetary union

Entrepreneurship and State Public Policy

Many state and local governments have focused on enacting policies to promote entrepreneurship in an effort to enhance economic growth. This paper will test the relationship between entrepreneurial activity and state economic freedom in a Granger causality framework. We build a panel data set of freedom scores and entrepreneurial activity measures within the fifty US states from 1981 to 2003, and our results show that, as a whole, economic freedom causes entrepreneurship. However, we find evidence that once entrepreneurs are in place, they increase the size of government spending, which is contradictory to economic freedom.entrepreneurship, public Policy, economic freedom

Essays on international monetary institutions, monetary policy, and economic stability

This dissertation is a collection of essays that focus on how the policy actions and design of monetary institutions affect various economic indicators, such as commodity prices, asset prices, and production. Chapter 1 of the dissertation discusses the role and design of monetary institutions. Chapter 2 outlines the process undertaken during the European economic and monetary unification with an emphasis on the European Central Bank (ECB). Chapter 3 empirically analyzes the effects that the ECB has had on the economic stability of its member countries. Specifically, substantial disagreement exists among economists about the degree to which central banks should pursue discretionary stabilization policy. The formation of the ECB provides a unique opportunity to test whether a shift to a less active central bank has resulted in more or less macroeconomic stability for these countries. Chapter 4 investigates whether barriers to currency competition placed on suppliers of money are associated with higher rates of inflation. First, I look at historical data on average annual inflation rates for nine OECD countries that experienced periods of free banking and compare them to their averages under central banking. Second, using a cross-section of OECD countries, I find that countries allowing citizens to legally hold foreign currency tend to have lower average rates of inflation. My results show that allowing competition among currency issuers heightens the incentives for monetary issuers to pursue lower inflation rates. Chapter 5 analyzes the monetary stability and overall economic performance of transition economies based on their chosen monetary regimes. The transition economies had several prominent monetary arrangements to choose from, such as sovereign central banks or currency boards. This chapter surveys the monetary institutions currently in place in several transition economies and compares them based on their ability to control inflation. Chapter 5 presents concluding remarks and summarizes the major findings of the research included in this dissertation