Theory of economics

Conclusion
Since the early 1980s, a large body of research has thrown doubt on the relevance of macroeconomic models for understanding exchange rates. I argue that a balanced reading of recent literature in exchange rate economics gives a more optimistic assessment. Many studies have established the pertinence of long-run purchasing power parity (PPP) and the explanatory power of macroeconomic fundamentals in real exchange rate fluctuations. A reasonably strong case can be made for a traditional macroeconomic interpretation of real exchange rates, which emphasizes short-run price stickiness, but long-run PPP. But a central new ingredient in this interpretation is the presence of international commodity market segmentation and persistent deviations from the `law of one price.' An example is given of a dynamic general equilibrium model that can reproduce some of the observed features of real exchange rate fluctuations.
The experience of central banks in developed and developing countries, as well as the results of research by international financial institutions, show that the goal of ensuring price stability in the implementation of monetary policy is a clear priority.
At the same time, the order and sequence of monetary policy implementation varies in different countries depending on the characteristics and structure of the economy.
According to the current Law of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan", the main purpose of the Central Bank is to ensure the stability of the national currency. In this case, the concept of "national currency stability" can be interpreted in two ways: the stability of the exchange rate against foreign currencies or the stability of its domestic purchasing power.²⁴
In the conditions of free formation of the exchange rate, the stability of the national currency is achieved by maintaining its domestic purchasing power.
At the same time, the free-floating exchange rate serves as an internal stabilizer of the economy. In other words, a corresponding change in the exchange rate in the face of external shocks and difficulties related to the balance of payments serves to encourage exporters and enterprises producing import-substituting products.
At the same time, it is planned to amend the legislation in order to avoid two different interpretations of the main purpose of the Central Bank's monetary policy and to clearly define the main directions of its activities.
Methods and mechanisms of monetary policy (the importance of the transition to inflation targeting)
The task of ensuring price stability in the domestic market requires a clear strategy and detailed plan for the implementation of monetary policy, as well as effective tools and mechanisms to achieve targets.
International experience in the use of monetary policy regimes
Methods widely used by central banks in developed and developing countries include inflation targeting, monetary targeting, exchange rate targeting, and nominal anchor regimes.
Although the task of achieving inflation targets is the main goal for most central banks, the above-mentioned methods differ mainly in terms of speed and intermediate targets.
An analysis of the specifics and effectiveness of monetary policy regimes, taking into account the characteristics of the national economy, shows that the inflation targeting regime is very suitable for the task of achieving price stability as a priority goal of the Central Bank in the medium term. As a result, the necessary legal framework and basic economic conditions have been created for the gradual transfer of the principles and methods of monetary policy to inflation targeting.
In particular, measures to liberalize exchange rate policy and ensure the formation of the exchange rate in market conditions, clearly define the priorities and practical independence of the Central Bank, the transition to an active phase of monetary policy, improve methods of calculating and assessing inflation, as well as transparency practical measures such as increasing and strengthening communication policy will create the basic conditions for the transition to inflation targeting.
At the same time, the existing risks and obstacles make it difficult to implement the task of introducing inflation targeting.
In turn, the Central Bank will focus on strengthening the forecasting and analytical base, improving monetary policy instruments and strengthening their channels of influence, developing communication policy and increasing public confidence.
The Central Bank will coordinate and cooperate with relevant ministries and agencies in the implementation of measures for the gradual transition to this regime.
In general, the transition to inflation targeting requires a radical overhaul and improvement of all aspects of monetary policy. This, in turn, means a qualitatively new stage in ensuring macroeconomic stability, which is the basis for sustainable economic growth in the long run.²⁵