E-Knjižnica FET "Dr. Mijo Mirković"

Monetary policy and business cycles in Croatia

Benazić, Manuel and Tomić , Daniel (2013) Monetary policy and business cycles in Croatia. In: The Future of Economics: Between Rules and Discretion. Juraj Dobrila University of Pula, Pula, pp. 151-179. ISBN 978-953-7498-71-9

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Inconsistency in macroeconomic policy and government failures in recognizing potential development moments lead to 'decision-making dilemma' ; should economic policy be determined by a legislation rule or by a policymaker's discretion? The fundamental framework for evaluation of monetary policy is a degree in which it effectively interprets expectation of economic agents about the macroeconomic outcomes. Monetary actions are thus based on asymmetric mis/information in which public expectations are formed defining changes in macroeconomic variables and expected policy course in future. What economic logic should monetary authority impose then? If it imposes a rule, central bank has to follow it in a medium or long-run regardless of the current economic situation. On the other hand, if it chooses discretion as a monetary instrument, central bank gains a right to act in accordance to its own assessment having the possibility to deviate from long-run objectives in order to satisfy some short run goals. Though these terms look profoundly different, they are mutually determined, since a rule is in fact a restriction on the monetary authority discretion. The aim of this paper is to evaluate the effectiveness of monetary policy in defining business cycles in Croatia, i.e. can it and in what way determine the cyclical movements of Croatian economy. Using Hodrick-Prescott filter for detrending selected macroeconomic variables, this paper gives a reflection on the past relationship between the characteristics of Croatian monetary policy and business cycles in order to identify the difference within a rule vs. discretion dilemma surrounding monetary policy of Croatian central bank. Namely, by revealing the ‘complexity’ of monetary policy in Croatia, we provide a framework for economic reasoning which economic agents could apply within their future decisions.

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Tip objekta: Dio knjige
Ključni pojmovi: monetary policy, business cycles, rule vs. discretion, Hodrick-Prescott filter, expectations, Croatia
Teme: 3 Društvene znanosti > 33 Ekonomija. Ekonomska znanost > 336 Financije. Uključujući: Javne financije. Bankarstvo. Novac > 336.7 Novac. Monetarni sustav. Bankarstvo. Burze
3 Društvene znanosti > 33 Ekonomija. Ekonomska znanost > 338 Gospodarsko stanje. Gospodarska politika. Upravljanje gospodarstvom. Gospodarsko planiranje. Proizvodnja. Usluge. Cijene > 338.1 Gospodarsko stanje. Gospodarski ciklus. Razvoj gospodarske strukture. Rast
Odjeli: Fakultet ekonomije i turizma "Dr. Mijo Mirković"
Datum pohrane: 20 Feb 2014 07:30
Zadnja promjena: 20 Feb 2014 07:30
URI: http://eknjiznica.unipu.hr/id/eprint/3271

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