Title

ECB Monetary Policy Actions and the Economic Conditions of a Non-Euro Member: The Case of Croatia

Document Type

Article

Publication Date

1-1-2017

Abstract

This paper analyses the importance of ECB monetary policy shocks in the domestic activities of a non-EMU member, Croatia, with the main focus on the inflation rate. Using a Vector Autoregressive Model with an exogenous variable specification, it is found that the contraction of foreign monetary shocks have a significant positive impact on the local inflation rate and output. Interestingly, the interest rate gap exerts a statistically significant effect on the economic activities of Croatia, suggesting that targeting exchange rate stability does not eliminate the significance of ECB's monetary policy changes.

DOI

10.1515/gej-2017-0008

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