engleski

Asset Prices Channel of Monetary Transmission in the Republic of Croatia

Through the research conducted in this article, authors tried to establish the abovementioned connection between monetary policy and asset prices, i.e. it was analyzed the asset prices channel transmission mechanism of monetary policy. According to the authors’ expectations and the research results of other authors, such connection was determined in Croatian monetary system as well. By its orientation, this research incline towards those researches which do not propagate a direct interference of monetary policy into asset prices regulation, but into examination of asset prices changes as an indicators of future inflation. Direct interference of monetary policy into asset prices regulation in Croatia is not even possible due to the low capital market capitalization. In such conditions, any interference of central bank into capital market would have a strong signal effect and a significant disturbance of supply and demand relationship. Furthermore, with its low capitalization, the influence of capital market to the real conditions in Croatian economy is negligible and mostly demonstrates its speculative character.

Asset prices channel, Monetary transmission mechanism, Croatia, VAR model

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