The Path of Exchange Rates in the Polish Economic Transformation

Introduction

Exchange rate policies in transition economies of Central and Eastern Europe have been widely discussed in the economic literature. The scope of the discussion is understandable - a system of exchange rates is important in the determination of the balance of payments position of the national economy with the rest of the world. Exchange rates play a significant role in small, open economies which dependence on external business cycle conditions is considerable. Nevertheless, the economic literature on transition economies tends to exaggerate the importance of exchange rates for the success of economic reform. This is because exchange rates in the economies evolving toward a free market system shall be in principle determined by market forces and free of the governmental interference. This is an inherent logic of transition. From this point of view, the heterodox programs of stabilization in the economies intransition which are based on the exchange rate anchor have a questionable impact on the attainment of the reform goals.