Comparing economic dynamics in the EU and CEE accession countries

JEL Classification: E32, E52, F31central and eastern Europe, exchange rate, Kalman filter, optimal currency area, Structural VAR

Central Bank Constitutions for Monetary Unions

Historical experience suggests that the distribution of monetary policy authority among the members of a monetary union is a key aspect of the design of a central bank constitution. We analyse alternative institutional solutions to that problem with different degrees of centralization of monetary policy decisions. The degree of centralization required to facilitate credible, low-inflation policies depends critically on the political structure of the monetary union. Efficient monetary stabilization requires centralized decision-making rules. Whether or not stabilization can be improved by adding central appointees to member state representatives on the central bank council depends on the stochastic structure of the relevant economic disturbances.Central Banks; Monetary Policy; Monetary Union