THE IMPACT OF THE CHOICE OF MONETARY POLICY ON HOUSEHOLDS

This paper looks at the impact a choice of monetary policy regime in a small open economy has on households. The choice of monetary policy in a small open economy analyzed in this paper is the choice between the fixed and variable exchange rate. The paper creates a dynamic model conditioned on the real exchange rate. In the end paper looks the data for the confirmation of theoretical assumptions. The data used is from Slovenia and Croatia which have experience both fixed and floating monetary regimes in last 15 years.