Wednesday, May 4, 2011

In Case You Were Worried That I'm Having Too Much Fun...

I'm still a graduate student and I still spend the majority of my days doing work for my classes. My current preoccupation (and occupation) is a paper I'm writing for The Economies of Central Asia. It's about exchange rate regimes and monetary policy and how the countries of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan used them to achieve economic and political goals after their independence from the Soviet Union.

Here's my preliminary introduction:

The independence of the five new countries of Central Asia presented a brand new laboratory in which economists could observe and analyze the results of monetary policy experiments in a way that was unprecedented in modern history. Born in the heat of extreme inflation and monetary instability, the monetary regimes of Central Asia sought to bring stability, trust, trade facilitation, growth and foreign investment. By 1997, all of the countries had tamed the extreme inflation of the immediate independence period and set out to build monetary regimes that would support their political and economic goals. This paper begins by describing the economic basis of the choices facing Central Asian monetary authorities in building exchange rate regimes, the trade-offs of these choices and how well these choices held up in the subsequent shocks of the Russian financial crisis of 1998, the Kazakhstan banking crisis of 2005, and the worldwide financial crisis of 2008. In doing so, the main exchange rate regime choices of the five countries of Central Asia will be described, with a special focus on the managed floating regime of the Kyrgyz Republic and the flexible peg regime of Kazakhstan. The paper will then analyze these choices in a comparative context and discuss whether a single monetary model can be successful in a Central Asian region with diverse goals, challenges, economies and governments.

The paper is due next Friday. Wish me luck!