Economic Change and Restructuring

, Volume 46, Issue 2, pp 219–253 | Cite as

A VECM evaluation of monetary transmission in Uzbekistan

  • Frank HespelerEmail author


This paper presents a VAR/VECM analysis of the monetary transmission process in Uzbekistan for the available data from 2000 to 2009. The general findings obtained support the hypothesis that the interest rate channel in Uzbekistan is relatively weak. Monetary transmission via the exchange rate channel seems to be stronger, even if the form of the channel remains quite ambiguous or rather chaotic. Partially this chaos can be blamed on the contradiction between existing restrictions on capital mobility and the dual objectives of a development of the financial sector and provision of macroeconomic stability. On an analytical level this paper suggests the use of a specific methodology for the future evaluation of monetary policy in Uzbekistan. This is especially important, because in future improved and/or more extensive data might alter some of the results obtained so far.


Monetary transmission Monetary policy VAR/VECM models Transition country 



The author thanks the Institute of Forecasting and Macroeconomic Research (IFMR) for the provision of some of the Uzbek time series data. For the data obtained from alternative Uzbek institutions IFMR provided the contacts to these institutions. The author also acknowledges financial support by the Federal Ministry for Economic Cooperation and Development of the Federal Republic of Germany within its program CIM. In addition the author thanks two anonymous referees for their proposals for improvements of the paper.


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Copyright information

© Springer Science+Business Media New York 2012

Authors and Affiliations

  1. 1.Department of Monetary EconomicsInstitute of Forecasting and Macroeconomic ResearchTashkentUzbekistan

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