Structural constraints and choice in monetary policy regime design: Bosnia and Kosovo in comparative perspective

Abstract

This thesis analyses Bosnia and Herzegovina and Kosovo in a comparative perspective using the classic method of Most Similar Systems Design by assessing the extent and nature of change in the two states’ monetary policy regime. It illustrates how different states that were once part of the same state structure opted for independent monetary policy as opposed to prior foreign-led or unofficial structures in different ways. It answers the question of how much change happened between these two periods (t1 and t2) and what was the nature of the change observed. Relying on the similarities between the two states, monetary policy regime change is analysed over two periods using the policy structure approach. I evaluate the empirical validity of several structural constraint and choice factors against the two cases. I argue that, when structural constraints were more at play in period t1, less change occurred in t2. If and when the states were under different conditions, change was more likely. I conclude by presenting the findings on the effect of structural constraints and choice variables on the decision to change (or not to change) monetary policy regime.