Dos Algarves (Nov 2019)
Does automation or discretion drive money supply in Bulgaria?
Abstract
The options for monetary discretion under the Bulgarian currency board arrangement (CBA) were analysed. A vector autoregression (VAR) was employed to identify the determinants of money supply in Bulgaria for the period 1998-2018. The results of the study imply that the movements of money supply in Bulgaria do not automatically follow the dynamics of the balance of payments but are affected in a discretionary way by the changes in the government deposit in the Issue Department of the Bulgarian National Bank (BNB). It may be inferred that money supply in Bulgaria under a CBA is more discretion-driven than automatically determined.
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