Elyor Davlatov

Type of the article: Research Article

Abstract
Counterintuitive responses of prices and exchange rates to monetary policy shocks are widely reported in transitional economies, yet whether these anomalies reflect the economy’s structure or the way the shock is identified remains unresolved. Using monthly data from January 2013 to July 2025, we test whether the anomalies survive under agnostic sign restrictions, not previously applied to Uzbek data, benchmarked against the recursive and zero contemporaneous schemes of our earlier studies. The recursive baseline reproduces both anomalies; the alternative schemes remove them, indicating they are largely artefacts of identification. This robustness differs sharply across variables. The absence of a price puzzle holds under sign restrictions across the full sample, alternative lag lengths, and both post-2017 and post-2020 subsamples, and it strengthens after each regime change. The absence of an exchange rate puzzle is directionally consistent – the currency never significantly depreciates when left unrestricted – but its magnitude and significance are fragile: the full-sample appreciation (roughly 1% at 12 months) is several times larger than in either subsample, and it loses significance once the September 2017 liberalization outlier is accounted for. We therefore do not find robust support for the exchange rate channel dominating the price channel. The contribution is methodological rather than descriptive: it shows which conclusions about Uzbek monetary transmission survive a change of identification, and that this robustness itself varies by variable. For policy, the results support continued use of sterilized foreign exchange interventions to smooth volatility, but not robust support for explicit exchange rate targeting.

Acknowledgment
This study was conducted at the Széll Kálmán Public Finance Lab of the Ludovika University of Public Service. Thank you for the university’s support.
The views expressed in this article are solely those of the authors and do not necessarily reflect the official position of the Central Bank of the Republic of Uzbekistan. The Central Bank of the Republic of Uzbekistan does not bear responsibility for the content of the article.