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As the monetary and financial systems in transition economies have evolved so have monetary policies. Many central banks have followed a course from exchange rate targeting, to targeting monetary aggregates to targeting inflation. We examine the development of monetary policy in Armenia, a small, open transition economy that adopted inflation targeting in January 2006. First, we review monetary policy in Armenia. Then we evaluate the capacity of the Central Bank of Armenia to implement inflation targeting. Finally, we estimate and simulate reaction functions to evaluate the effectiveness of monetary policy. We find that the Central Bank may have been overly restrictive. doi:10.1057/ces.2008.22 Keywords: Armenia, monetary policy, inflation targeting, Taylor Rule JEL Classifications: E42, E52, E58, P24, INTRODUCTION As the economic structure and institutions of transition economies of Eastern Europe and the former Soviet Union have evolved so have their economic policies. Initially all had fiscal and [...]

The creation and maturation of financial institutions in transition and emerging economies has been of central importance in their economic development over the last decade. Because policies are institution dependent, [...]

When the centrally planned economies of eastern Europe and the Soviet Union began transition to a market economy in the early 1990s, it was widely recognised that the system of [...]

Financial Structure and Economic Growth: A Cross-Country Comparison of Banks, Markets and Development Asli Demirguc-Kunt and Ross Levine (eds) The MIT Press: Cambridge and London, 2001, vii + 436 pp., [...]

Two specialists on the Polish economy examine the process whereby the fiscal system of Poland's centrally planned economy was replaced during the 1990s by a system designed for a market economy. Changes in the structure of both revenues and expenditures are described. The authors demonstrate that fiscal authorities in Poland heretofore have maintained budget control despite radical changes in fiscal systems and institutions. However, they identify and assess emerging concerns regarding the ability of fiscal authorities to manage the economy in the face of external shocks, potential mismanagement of extra-budget expenditures such as social security, and increased debt-financing requirements. Journal of Economic Literature, Classification Numbers: E50, E60, H50, H60. 6 figures, 5 tables, 27 references.

We modify the Gali and Monacelli small open economy dynamic stochastic general equilibrium (DSGE) model, calibrate to Mexican data and simulate the impact of the financial crisis on Mexico, under floating and counter factual fixed exchange rates. The floating exchange rate ameliorates welfare losses for Mexico. They are greater under fixed exchange rates because the return paths to equilibrium are more volatile (higher variance) and output, consumption and employment impulse response functions (IRFs) overshoot. Monetary policy, inflation targeting with floating exchange rates, clearly reduced the welfare costs vis-à-vis other counter factual policies including consumer price index-based Taylor rule, domestic inflation Taylor rule and fixed exchange rates. [ABSTRACT FROM AUTHOR]

The role of foreign capital inflow, foreign direct investment ( FDI) and foreign portfolio investment ( FPI), on export behavior of both recipients and non-recipient competing firms in the same sector often guides economic development policy. By using panel data of Indian IT firms over 2000-2006, we show that FDI reduces the sunk costs of entering foreign markets and therefore positively effects both the decision to export and the export propensity of recipient firms. Foreign portfolio investment has no effect on the decision to export, but it does marginally increase the volume of exports. Further, these positive FDI and FPI recipient effects do not spill-over to non-recipients. [ABSTRACT FROM AUTHOR]