4/2001 (inglise keeles) Raoul Lättemäe. Monetary transmission mechanism in Estonia: Some theoretical considerations and stylized aspects

Working Papers of Eesti Pank. No 4, 2001

The monetary system in Estonia is based on the currency board arrangement. The strong commitments and rule-based features of currency board imply that there is no active monetary policy in Estonia - all necessarily monetary adjustments are left to the market forces. Under fixed exchange rate and free capital mobility Estonian monetary conditions are therefore closely linked with monetary policy in Europe - in addition to the changes in Estonian risk-premium, interest rate developments in Europe can directly influence Estonian interest rates. Those monetary signals transmit widely into Estonian financial sector and ultimately into Estonian real sector through various channels. Some theoretical and intuitive aspects that can affect this process in Estonia have gained special attention in this paper.

Author's e-mail address: raoul.lattemae [at] epbe.ee

The views expressed are those of the authors and do not necessarily represent the official view of Eesti Pank.

Table of Contents

Introduction to the Series "Monetary Transmission Mechanism in Estonia"
1. MTM under CBA - Estonian CBA and Theoretical Considerations
1.1. What is CBA in Estonia?
1.2. Monetary Policy Framework in Estonia
1.3. MTM in CBA
2. MTM in Estonia - Some Stylized Aspects
2.1. From Monetary Conditions to Financial Prices: Structural Issues and Experience
2.2. From Financial Prices to Spending: Structural Issues and Experience

Monetary Transmission Mechanism in Estonia - Some Theoretical Considerations and Stylized Aspects, Working Papers of Eesti Pank, No 4, 2001 (PDF*)

* To read PDF file, you need Adobe® Acrobat® Reader™ freeware, it may be downloaded from Adobe homepage.