Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/74979
Authors: 
de Haan, Jakob
Berger, Helge
van Fraassen, Erik
Year of Publication: 
2001
Series/Report no.: 
LICOS Discussion Paper 96
Abstract: 
Countries in transition often face high levels of inflation. This paper discusses two ways to reduce inflation: the creation of an independent central bank and the introduction of a currency board. It is shown that both options have advantages and disadvantages. This framework is used for a nfirmative analysis of the policy choices of the Baltic states. It is argued that, while Estonia's currency board based on the D-mark is very much in line with the criteria for an optimal monetary regime, Lithuania's initial choice of a US-dollar based currency board is not. The peg to the SDR - which very much looks like a currency board - as (eventually) adopted by Latvia is an intfirmediate case. Some policy recommendations and the problem of exit strategies towards the Euro zone are discussed.
Subjects: 
currency board
central bank independence
Baltics
JEL: 
E58
E61
F31
Document Type: 
Working Paper

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