Scandinavian Working Papers in Business Administration
Working Paper Series,
Lund University, Institute of Economic Research
No 2003/7: Do Exchange-Rate Regimes Matter for Monetary-Policy Autonomy? The Experiences of 11 Small, Open European Economies in the 1980s and 1990s
Jens Forssbæck () and Lars Oxelheim ()
Additional contact information
Jens Forssbæck: Department of Business Administration, School of Economics and Management, Lund University, Postal: Department of Business Administration, School of Economics and Management, Lund University, Box 7080, SE-220 07 Lund, Sweden
Lars Oxelheim: Department of Business Administration, School of Economics and Management, Lund University, Postal: Department of Business Administration, School of Economics and Management, Lund University, Box 7080, SE-220 07 Lund, Sweden
Abstract: We investigate monetary-policy autonomy under different exchange-rate regimes in small, open European economies during the 1980s and 1990s. We find no systematic difference in the degree of nominal monetary-policy autonomy enjoyed by those countries that pursue flexible exchange-rate regimes as compared to those that have kept their exchange rates fixed. Our interpretation of the results is that over the medium and long term following an ‘independent’ target for monetary policy, which does not deviate much from the targets of those countries to which one is closely financially integrated, is as constraining as locking the exchange rate to some particular level.
Keywords: exchange rate regimes; monetary policy autonomy; capital mobility
29 pages, September 30, 2003
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