Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/180083 
Authors: 
Year of Publication: 
2015
Citation: 
[Journal:] Baltic Journal of Economics [ISSN:] 2334-4385 [Volume:] 15 [Issue:] 1 [Publisher:] Taylor & Francis [Place:] London [Year:] 2015 [Pages:] 65-79
Publisher: 
Taylor & Francis, London
Abstract: 
In this article, the issue of the monetary independence problem in view of the Romania's European Monetary Union accession is investigated empirically. It is frequently argued that for such a country, the main cost of participation in a currency area is the loss of monetary policy independence. This article raises the question of the actual possibility of monetary independence in a small open economy operating within highly liberalized capital flows and highly integrated financial markets. The main hypothesis of the article is verified using the vector error-correction mechanism model and several parametric hypotheses concerning the speed and asymmetry of adjustment to verify the risk premium and the nature of transmission of the Euribor interest rates on the Romanian Robor. The hypothesis of a one- to-one relationship between interest rates between Romania and the Eurozone cannot be rejected, despite the rapid disinflation at the beginning of the sample.
Subjects: 
EMU
inflation targeting
monetary policy independence
monetary union
small open economy
JEL: 
E43
E52
E58
F41
F42
C32
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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