Optimal Monetary Policy Framework in Belarus

The study uses the example of Belarus to evaluate the effectiveness of monetary policy regimes that can serve as the basis for monetary policy strategies in emerging market countries. Based on the macroeconomic gap model for Belarus, simulations of the impact of strong shocks on the economy using different monetary policy regimes have been implemented. The values of the loss function for each regime have been calculated, which form the basis for assessing the comparative effectiveness of the regimes. The effects of strict capital flow restrictions and low central bank credibility on the stabilization capacity of regimes are examined. Given the existing sanctions and internal capital controls, the most preferable regime for Belarus is a flexible inflation targeting.