Projects

The Role of Exchange Rate Channel in the Transmission of Monetary Policy: The Case of Standard and Non-standard Monetary Policies

Ing. Boris Fišera, PhD.

Members of project
Prof. Dr. Ing. Menbere Workie Tiruneh, PhD., Ing. Mária Širaňová, MA., PhD., Martin Melecký

• Basic informations
• Characteristics

• Duration of the project: 01/2023 - 12/2025
  ID number: GV-2022-4-P15-Z2

• The primary objective of this project is to empirically investigate the role of the exchange rate channel in the transmission of monetary policy. Despite the importance of the exchange rate channel in the transmission of monetary policy even in larger economies, this topic remains understudied, particularly for the Euro Area (EA). The project focuses primarily on the EA, but has wider international implications. The project is divided into three main parts. First, the project will use a novel empirical approach to estimate what the transmission of different types of standard and nonstandard monetary policies in the EA would be in the absence of the exchange rate channel. Second, the project will explore, whether the central bank being 'behind the curve' (i.e., having too restrictive or too expansionary monetary policy stance) influences the effectiveness of the monetary transmission via the exchange rate channel. Third, the project would also investigate the consequences of large central bank balance sheet accumulation (with focus on foreign exchange reserves), which is often associated with the conduct of non-standard monetary policies, for the ability of the central bank to conduct its monetary policy and thus ensure effective monetary transmission. All three activities represent a novel contribution to the empirical research in monetary economics and would thus help the policymakers with the conduct of monetary policy. All the findings will be published in field journals.