Table Of ContentCentral Banking, Monetary Policies,
and the Implications for Transition
Economies
Central Banking, Monetary Policies,
and the Implications for Transition
Economies
Mario 1. Blejer
Marko Skreb
.....
"
Springer Science+Business Media, LLC
Library of Congress Cataloging-in-Publication Data
Blejer, Mario 1.
Central banking, monetary polieies, and the implieations for
transition eeonomies / by Mario 1. Blejer and Marko Skreb.
p.e.m.
Includes bibliographieal referenees and index.
ISBN 978-1-4613-7365-0 ISBN 978-1-4615-5193-5 (eBook)
DOI 10.1007/978-1-4615-5193-5
1. Banks and banking, Central. 2. Monetary poliey. 3. Banks
and banking, Central --Europe, Eastern. 1. Skreb, Marko, 1957
II. Title
HGl811.B541999
332.1'1 --de21 99 -11865
CIP
Copyright ® 1999 by Springer Science+Business Media New York
Originally published by Kluwer Academic Publishersin 1999
Softcover reprint of the hardcover lst edition 1999
AII rights reserved. No part of this publieation may be reprodueed, stored in a
retrieval system or transmitted in any form or by any means, meehanieal, photo
eopying, recording, or otherwise, without the prior written permission of the
publisher, Springer Science+Business Media, LLC.
Printed on acid-free paper.
Contents
About the Editors ix
Introduction
1
Central Banking and Monetary Policies: Major Issues and Implications
for Transition Economies 3
Mario I. Blejer and Marko Skreb
II 9
Central-Bank Independence
2
Central-Bank Independence and Monetary Policy 11
Jacob A. Frenkel
3
Central Banking in a Democratic Society: Implications for Transition
Countries 31
Frederick S. Mishkin
4
Central-Bank Independence and Political Business Cycles: A Critical
Reexamination 55
Allan Drazen
5
Political Culture and the Political Economy of Central-Bank Independence 73
Arye L. Hillman
VI CONTENTS
III 87
Defining Central-Bank Functions
6
Central Banking and Economic Development 89
Maxwell J. Fry
IV 141
Central Banks and Financial Soundness
7
Central Banks, Asset Bubbles, and Financial Stability 143
George G. Kaufman
8
The Conduct of Monetary Policy and Banking Soundness:
A Siovenian Episode 185
Velimir Bole
V 213
Disinflation and the Role of Nominal Targets
9
Monetary Policy Strategies for Disinflation: Lessons from Recent
Experiences in Transition Economies and Israel 215
Gil Bufman and Leonardo Leiderman
~ 271
Currency Crises and Capital Controls
10
Speculative Attacks and Capital Mobility 273
Charles Wyplosz
11
Nascent Capital Flows, Learning, and Chilean-Type Controls 297
Marcelo Selowsky and Ricardo Martin
12
The Role of the Central Bank in Capitals Account Liberalization:
The Case of Croatia 317
Velimir Sonje
VII 339
Currency Boards
13
Some Reflections or Currency Boards 341
Stephen H. Hanke
CONTENTS vii
14
The Central Bank of Bosnia and Herzegovina: Its History and Its Issues 367
Warren Coats
VIII 401
EMU and Transition Economies
15
The International Impact of the Euro and Its Implications for Transition
Countries 403
Robert A. Mundell
16
Monetary and Exchange-Rate Policy of Transition Economies of Central
and Eastern Europe After the Launch of EMU 429
Paul A. Masson
Index 453
About the Editors
Mario I. Blejer is senior advisor at the Monetary and Exchange Affairs
Department of the International Monetary Fund and currently holds the
Walter Rathenau Chair in Economics at the Hebrew University of
Jerusalem. He began his career at the IMF in 1980, and during his tenure
he has been involved in a wide range of issues, including work on the assess
ment of the effectiveness of Fund stabilization programs, financial policies,
and economic reforms. He was chief of the Fund's Fiscal Studies Division
and also worked as head of the Macroeconomic Division of the World
Bank in the early 1990s. He was in charge of the preparation of the mone
tary and financial section of the Joint Study of the Soviet Economy, pro
duced by the IMF together with the World Bank, the OECD, and the EBRD
in 1990.
Mario I. Blejer took a B.A. and a M.A. from the Hebrew University of
Jerusalem and received a Ph.D. in economics from the University of
Chicago. He worked at the Center for Monetary Studies in Latin America
(Mexico) and has taught at Boston University, New York University, and
the Graduate Institute for International Studies in Geneva. He has Served
as a consultant with the Inter-American Development Bank and currently
maintains recurrent visiting professorial appointments at the Central Euro
pean University in Budapest and at the Universidad de San Andres in
Buenos Aires. He is currently a member of board of editors of the Euro
pean Journal of Political Economy.
His numerous articles have appeared in international journals including
the American Economic Review, the Journal of Political Economy, the
Review of Economics and Statistics, and others and have dealt with fiscal
issues, trade and balance-of-payment problems, monetary economics, and
economic stabilization and liberalization in Latin America and in
x ABOUT THE EDITORS
economies in transition. He is the author of several books and has also
coedited a large number books on fiscal policies, international macro
economic issues, and economic and financial reforms. His most recent
publications include The Making of Economic Reforms in Eastern
Europe: Conversations with Leading Reformers in Poland, Hungary, and
the Czech Republic (with F. Coricelli); Financial Factors in Economic
Stabilization and Growth (with L. Leiderman et al.); The Macroeco
nomic Dimensions of Public Finance (with T. Ter-Minassian); Macroeco
nomic Stabilization in Transition Economies (with M. Skreb); and
Financial Sector Transformation: Lessons from Transition Economies (with
M. Skreb).
Marko Skreb received a B.A. (1980), an M.A. (1984), and a Ph.D. (1990) in
economics from the Faculty of Economics at the University of Zagreb
(Croatia).
He received a certificate from the Salzburg Seminar in American Studies
(Austria) in August 1984 and a certificate from the Economics Institute
(Boulder, Colonado) in August 1987 as a Fulbright fellow. Also as a Ful
bright fellow, he spent academic year 1987 to 1988 at the Department of
Economics at the University of Pittsburgh.
He started his professional work as planner at the Bureau of Planning
of Croatia and continued it as assistant and then senior assistant at the
Faculty of Economics, the Department of National Economy. From Sep
tember 1991 to November 1992, he was assistant professor at the Depart
ment for Macroeconomics and Economic Policy.
He became director of the Croatian National Bank Research and Analy
sis Department in 1992, which has since expanded into the Research and
Statistics Area.
He was appointed economic adviser to the President of the Republic of
Croatia in 1995 and was appointed for a six-year term as governor of the
Croatian National Bank in 1996, the youngest governor of the central mon
etary authority ever to be appointed in the new Croatian state. Since 1997,
he also has been associate professor at the University of Zagreb.
In 1997, he was awarded Central European Annual Award for Excel
lence-Best Central Bank Governor and was proclaimed the Best Eastern
European Banker by Euromoney Publications. He received the Order of
Prince Branimir with Collar for his outstanding contributions to promoting
the international position and reputation of the Republic of Croatia and
the Order of the Croatian Morning Star with the Figure of Blaz Lorkovic
for exceptional achievements in economy.
ABOUT THE EDITORS xi
He is also the author of innumerable articles, books, and other publica
tions and has been an active participant in a number of conferences, semi
nars, and workshops. His publications include "Croatia: An Insider's View
of Transition," Sais Review 18(2) (Summer) (Summer-Fall, 1988); Macro
economic Stabilization in Transition Economies (coedited with Mario I.
Blejer, 1997); "A Paradox of Transition to a Market Economy: How Will the
Role of the State Change?" (with Ivo Bicanic), in F. Targetti (ed.), Privati
zation in Europe: West and East European Experiences (1992); "Service
Policy and Development," in S. Sharma (ed.), Development Policy (1992);
"The Service Sector in East European Economies: What Role Can It Play
in Future Development?" (with Ivo Bicanic), Communist Economies and
Economic Transformation 3(2) (1991).
I
INTRODUCTION
