My Ph.D. dissertation thesis is about Monetary Policy and contains three chapters:

1. Monetary Policy in Resource-Rich Developing Economies

The economic literature acknowledges that to avoid the resource curse, resource-rich countries should restrict …scal expansion and save a signi…cant part of resource revenues outside the domestic economy. However, in these countries governments tend to ine¤ectively spend a considerable part of windfall revenues in the short run. In this research I construct a DSGE model for a small, open economy to show that if …scal indiscipline in the form of immediate responses to foreign resource revenue changes is inevitable, then monetary policy can help improve the allocation problem. The simulation results indicate that targeting the exchange rate or price level through foreign exchange interventions by the central bank can soften the negative e¤ects of Dutch Disease and stabilize the economy in the face of volatile natural resource revenues in the short run. I also …nd that a …xed exchange rate regime outperforms price level targeting by delivering higher isolation and hence less vulnerability to shocks in natural resource revenues. In contrast, if the central bank chooses to pursue a laissez faire policy, i.e., not to intervene, then the economy becomes vulnerable to shocks in foreign resource revenues and the resource curse becomes more severe.

2. Exchange Rate Regime and Macroeconomic Performance in Oil Exporting Countries

This paper provides an empirical multi-country test to check the influence of monetary policy on economic performance in oil exporting countries. In particular I examine whether the exchange rate regime plays a specific role in macroeconomic stabilization and economic growth in these countries using a sample of 180 countries over the thirty-two year period 1980-2011. Based on my previous findings from the theoretical model I expect to uncover that oil exporting countries implementing a fixed exchange rate regime are more likely to have higher growth and lower volatility.

3. The Impact of Monetary Policy on Financing of Czech Firms, with Dana Hajkova, and Ivana Kubicova

This paper uses firm-level financial data for Czech firms and tests for the role of companies’ financial structure in the transmission of monetary policy. Our results indicate that higher short-term interest rates coincide with lower shares of total debt, short-term bank loans, and long-term debt. We find that firm-specific characteristics, such as size, age, collateral, and profit, affect the way in which monetary policy changes are reflected in the external financing decisions of firms. These findings indicate the presence of informational frictions in credit markets and hence provide some empirical evidence of the existence of broad credit and relationship lending channels in the Czech Republic.