Monetary policy in the context of Vietnamese economy.

Summary This thesis offers four contributions to the study of monetary policy in the context of the Vietnamese economy, from 1995-1996 to the present.Chapter 1 provides an overview of the Vietnamese economy and its monetary policy. It is a chapter that problematizes the issues dealt with econometrically in the rest of the thesis.Chapter 2 show that there is a long-term relationship between the black market exchange rate and its monetary variables. The official exchange rate, money supply gap and domestic interest rate have significant positive effects on the black market exchange rate while real domestic output and foreign interest rate have a significant negative impact on this index. Chapter 3 provide strong evidence on the long-run relationship between the exchange rate and its relative monetary fundamentals. Although the signs of the estimated interest rates are ambiguous, the estimated coefficients on money and yield are consistent with all traditional variants of the monetary model of exchange rate determination. Finally, we find that the pass-through of the exchange rate to inflation is strong and rapid, and that the exchange rate has a significant positive effect on inflation. The money supply plays an important role in determining inflation while the interest rate does not seem to have a significant impact on inflation. In addition, the price of oil has a significant influence. A US interest rate shock plays an insignificant role in explaining the variability of domestic macroeconomic variables.