Some New Insights into Monetary Transmission Mechanism in Bulgaria

Some New Insights into Monetary Transmission Mechanism in Bulgaria

The presence of a Currency Board (CB) monetary system in Bulgaria is a key factor in assessing monetary policy transmission. Using a generalized impulse response analysis, we propose evidence based on the estimation of VAR models supporting the endogeneity of main Bulgarian monetary aggregates, in response to shocks on the ECB interest rate. These results, together with the analysis of the behavior of real variables, shed a new perspective on the CB functioning of Bulgaria.

Ⅰ. Introduction

Ⅱ. An Overview of the Bulgarian Monetary System and Monetary Policy

Ⅲ. Data and Methodological Considerations

Ⅳ. VAR Investigation and Examination of Dynamic Responses

Ⅴ. Conclusion

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