THE IMPACT OF THE APPLIED EXCHANGE RATE REGIMES ON THE INTERNAL BALANCE OF TRANSITION COUNTRIES

  • Vlado Vujanić The Republic of Srpska, Ministry of Finance, Bosnia and Herzegovina
  • Vasilj Žarković University of Banja Luka, Faculty of Economics Banja Luka, Bosnia and Herzegovina
  • Dragan Gligorić University of Banja Luka, Faculty of Economics Banja Luka, Bosnia and Herzegovina

Abstract

One of the key goals of the economic policy makers of every country is to achieve internal and external balance. An unavoidable segment of the analysis concerning the achievement of internal and external balance is certainly the influence of the exchange rate regime applied in a country. European transition countries, despite their similar initial problems and fnal objectives, applied different exchange rate regimes adapted to the economic circumstances and needs of the country. Te paper aims to examine and demonstrate the impact of the applied exchange rate regime on the internal balance of the transition countries. Te research encompasses 10 representative transition countries, in the period from 2000-2014. Te results of the research, from the aspect of internal balance, confrmed the justifcation of the application of the floating exchange rate regime in more developed, but not in less-developed, European transition countries. Te application of floating exchange rate regimes in less-developed transition countries is associated with a considerably higher average inflation rate, which may be explained by the higher import dependence of lessdeveloped countries and by the consequent transfer of depreciation to price growth.  

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Author Biographies

Vlado Vujanić, The Republic of Srpska, Ministry of Finance, Bosnia and Herzegovina


Vasilj Žarković, University of Banja Luka, Faculty of Economics Banja Luka, Bosnia and Herzegovina


Dragan Gligorić, University of Banja Luka, Faculty of Economics Banja Luka, Bosnia and Herzegovina


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Published
2017-12-29
How to Cite
VUJANIĆ, Vlado; ŽARKOVIĆ, Vasilj; GLIGORIĆ, Dragan. THE IMPACT OF THE APPLIED EXCHANGE RATE REGIMES ON THE INTERNAL BALANCE OF TRANSITION COUNTRIES. ECONOMICS - Innovation and economic research, [S.l.], v. 5, n. 2, p. 51=64, dec. 2017. ISSN 2303-5013. Available at: <http://economicsrs.com/index.php/economicus/article/view/117>. Date accessed: 22 feb. 2018. doi: https://doi.org/10.1515/eoik-2017-0018.
Section
Original scientific paper