dec xvii dubrovnik,30.6.11
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DEC XVIIDUBROVNIK,30.6.11
TOMISLAV GALAC AND EVAN KRAFT
“Monetary and financial policies for ‘de-euroization’
-a case study of Croatia”
COMMENT by Oleh Havrylyshyn
2
CONTRIBUTION OF PAPER• UNLIKE MANY STUDIES PAPER CONSIDERS
BOTH FE ELEMENTS( CE, DE)THEIR LINKAGES-ESP DE CAUSING CE
• WISELY FOCUSES ON THE RISKIER ONE –CE.• BESIDE THE CONVENTIONAL DETERMINANTS
(STABILITY, INTEREST, ER POLICY ) , PAPER GIVES DETAILED INSIGHT INTO 10 VERY NARROW DIRECT REGULATORY INSTRUMENTS OF CB,POINTS TO RELATIVE IMPORTANCE
• PROVIDES MANY INTERESTING FINDINGS: e.g. ER stab.policy may raise FE at first, but eventually pays off, and it falls again.
3
MAIN ISSUES TO ADDRESS
• WHERE IS FINANCIAL DEPTH IN ALLTHIS ?
• DEEPER ANALYSIS, SENSITIVITY TESTS FOR REGULATORY INSTRUMENTS
• CLARIFY DOLLAR/ EURO PORTIONS AND ASK IF THE CHANGE MATTERS
4
WHERE IS FINANCIAL DEPTH ?
• NO VAR FOR FINDEPTH? WHY?
• DOES INTEREST SPREAD PROXY THIS?
• IS THAT ENOUGH?
• SURELY FINDEPTH INCREASED AND WAS IMPORTANT IN PROCESS?
5
REGULATORY MEASURES OF HNB- MEASURING,INTERPRETING • NUMBER OF REGULATORY INSTRUMENTS
VERY LARGE, NOT EASY TO HAVE CARDINAL MEASURES , INTER-DEPENDENT EFFECTS
• UEFUL TO HAVE MORE DETAIL ON HOW THIS VAST TASK WAS HANDLED, WHY JUST DUMMIES WHEN SOME (RR), (KHR) HAVE CARDINAL VALUE?WHICH CONCLUSIONS HAVE HIGH CONFIDENCE, WHICH NOT ?.
6
REGULATORY MEASURES.2
• ONE APPROACH IS TO DO A LITLE MORE EXPERIMENTATION, SENSITIVITY IN SPECIFYING THESE VARIABLES.
• ANOTHER MAY BE TO RETURN TO THE QUALITATIVE ANALYSIS OF Sec.4 DEFINING THESE VARIABLES AND TELL FULLER STORIES BASED ON ECONOMETRIC RESULTS.
• EXAMPLE OF ABOVE: DESPITE EVASION PROBLEM FOR FCLR IT SEEMS ONE OF MOST IMPORTANT AND EFFECTIVE : EXPAND QUALITATIVE EXPLANATION
7
EUROIZATION OR DOLLARIZATION
• BOTH TERMS MEAN THE SAME, BUT AWKWARD AND PARTIAL; CENTRAL EUROPE SINCE 2000 EUROIZATION MAKES SENSE
• BUT CROATIAN HAS A BETTER WORD FOR IT: VALUTIZACIJA (and a local literature” !!-Pertot (1980), Teorija Dispariteta Troskova, Cijena i Valuta”)
• THIS IS MERE TERMINOLOGY; MORE IMPORTANT…..
8
EURO/DOLLAR RATIO?• PRESUMABLY ROLE OF EURO IN
“VALUTIZATION” INCREASED-USEFUL TO AT LEAST KNOW THIS.
• EVEN MORE USEFUL IS TO ASK : DOES IT MATTER FOR ECONOMETRIC RESULTS ?
• GLOBALLY, IN RECESSION YEARS TRADITIONAL FLOW INTO DOLLARS ROSE DESPITE SEVERE US CRISIS. DID THE SAME HAPPEN IN CENTRAL EUROPE, CROATIA? EURO-PERIPHERY CRISIS MIGHT SUGGEST YES—THIS MERITS ATTENTION
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