Selected aspects of monetary integration

Abstract

The paper estimates the Monetary Condition Indices (MCIs) for three EU accession countries: the Czech Republic, Poland and Slovakia and assesses the relative importance of interest rates and of the exchange rate in the transmission of monetary policy.The calculated MCI ratios indicate that the exchange rate has surprisingly little influence on the Slovakian economy.The MCI ratio for the Czech Republic is very much comparable to that of small EU countries.Poland seems to be extremely sensitive to changes in the exchange rate.However, estimations appear to be quite sensitive to different specifications, and therefore should be treated with caution. Key words: Monetary policy, Monetary Condition Index, the Czech Republic, Poland, Slovakia