Monetary policy, macroeconomic adjustment and currency speculation under floating exchange rates: the case of Bulgaria |
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Authors: | Rumen Dobrinsky |
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Affiliation: | Centre for Strategic Business and Political Studies XXI Century Foundation 11, Aksakov sir. Sofia 1000, Bulgaria TEL: 359 2 807669 |
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Abstract: | This paper deals with the Bulgarian experience with exchange rate policy and the related macroeconomic adjustment in the transition period. It is argued that in the context of the Bulgarian macroeconomic environment, the exchange rate regime and the exchange rate policy (or the lack of such) did play a crucial role in determining the patterns of macroeconomic adjustment in this period. A simple general equilibrium model is suggested that provides some insights into the stylized performance of an economy under certain assumptions, similar to those characterizing the transitional state of the Bulgarian economy. Finally, some aspects of Bulgarian macroeconomic performance in recent years are analysed on the basis of the available empirical information and using the framework of the theoretical model. The paper concludes with the policy lessons of this experience. |
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Keywords: | exchange rate policy monetary policy floating exchange rate regime macroeconomic adjustment currency speculation |
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