engleski

The Monetary Transmission Mechanism in the Republic of Croatia

Primary goal of this paper is to analyze functioning of the monetary transmission mechanism in Croatia. A monetary transmission mechanism represents foundation of any financial system. It also represents ways in which monetary policy operates and affects overall economic activity of a country. Furthermore, insight into the monetary transmission mechanism is valuable for fulfilling convergence criteria for accession to the EU and to the EMU. Thus, due to great importance of this process, in several sections of this paper, a comparative analysis with the EU is included. Furthermore, practical solutions for Croatia are supplied in order to harmonize the transmission mechanism with one in the EU. In this paper VAR (Vector Autoregressive) econometric analysis will be used as a most widely used method for the analysis of the transmission mechanism. The analysis includes definition of the econometric model, causality analysis, and graphical analysis.

monetary transmission mechanism ; short-term interest rate ; VAR ;

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