Output Volatility In Macedonia: A Role For The Exchange Rate?
AbstractThe study aims to empirically explore the relationship between exchange-rate rigidity and output volatility for Macedonia, building on the flaws of the existing, though scarce literature on the topic. Specifically, it carefully constructs the output volatility regression; considers the measure of output volatility; and accounts for the endogeneity bias doubted to be present in the respective literature. Moreover, it utilizes a Hodrick-Prescott definition of volatility, to avoid persistent series which are obtained by using rolling standard deviations. The empirical investigation covers the period 1998:Q1 - 2009:Q2 and uses a GMM estimator. We find that, in general, a TOT shock opts to increase output volatility, but under a more flexible regime, it starts to affect the output fluctuations negatively, implying a role of a buffer. Quite the contrary, when nominal shocks (monetary and/or fiscal) hit the economy, a more rigid alternative of the exchange rate is preferable.
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Bibliographic InfoArticle provided by University of Craiova, Faculty of Economics and Business Administration in its journal Revista Tinerior Economisti(The Young Economists Journal).
Volume (Year): 1 (2010)
Issue (Month): 14 (April)
exchange-rate regime; output volatility;
Find related papers by JEL classification:
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"Exchange Rate Regimes and Macroeconomic Stability in Central and Eastern Europe,"
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NBER Working Papers
8963, National Bureau of Economic Research, Inc.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2004. "The Modern History of Exchange Rate Arrangements: A Reinterpretation," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 1-48, February.
- Reinhart, Carmen & Rogoff, Kenneth, 2004. "The modern history of exchange rate arrangements: A reinterpretation," MPRA Paper 14070, University Library of Munich, Germany.
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