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The Euro as a Monetary Anchor in the CEECs

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Author Info
Agnès Bénassy-Quéré ()
Amina Lahrèche-Révil

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Abstract

We study whether Central and Eastern European Countries (CEECs) have an incentive to use the euro as a monetary anchor. Adapting a cross-section estimation method initiated by Bayoumi and Eichengreen, we show that, compared to an optimum currency area standard, the CEECs have paid too much attention to the USD in the past and should prefer the euro to the dollar as a nominal anchor. Through a theoretical model that takes external constraints into account, we then show that the CEECs should also have an incentive to stabilize their currencies in real terms against a basket where the euro would be prominent. Copyright Kluwer Academic Publishers 2000

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File URL: http://hdl.handle.net/10.1023/A:1008331008940
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Publisher Info
Article provided by Springer in its journal Open Economies Review.

Volume (Year): 11 (2000)
Issue (Month): 4 (October)
Pages: 303-321
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Handle: RePEc:kap:openec:v:11:y:2000:i:4:p:303-321

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Web page: http://www.springerlink.com/link.asp?id=100323

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Related research
Keywords: currency pegs; currency baskets; euro; Central and Eastern European Countries;

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References listed on IDEAS
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.:
  1. Richard Portes & Hélène Rey, 1998. "The emergence of the euro as an international currency," Economic Policy, CEPR, CES, MSH, vol. 13(26), pages 305-343, 04. [Downloadable!] (restricted)
    Other versions:
  2. Paul R. Masson, 1999. "Monetary and Exchange Rate Policy of Transition Economies of Central and Eastern Europe after the Launch of EMU," IMF Policy Discussion Papers 99/5, International Monetary Fund.
  3. Grubel, Herbert G & Lloyd, P J, 1971. "The Empirical Measurement of Intra- Industry Trade," The Economic Record, The Economic Society of Australia, vol. 47(120), pages 494-517, December.
  4. Bayoumi, Tamim & Eichengreen, Barry, 1996. "Operationalizing the Theory of Optimum Currency Areas," CEPR Discussion Papers 1484, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  5. Lionel Halpern & Charles Wyplosz, 1996. "Equilibrium Exchange Rates in Transition Economies," IMF Working Papers 96/125, International Monetary Fund.
  6. Alessandro Prati & Garry J. Schinasi, 1997. "European Monetary Union and International Capital Markets: Structural Implications and Risks," IMF Working Papers 97/62, International Monetary Fund.
  7. Jeffrey A. Frankel & Andrew K. Rose, 1996. "The Endogeneity of the Optimum Currency Area Criteria," NBER Working Papers 5700, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  8. Philipp Hartmann, 1996. "The Future of the Euro as an International Currency: a Transactions Perspective," FMG Special Papers sp91, Financial Markets Group. [Downloadable!] (restricted)
  9. Helmut Wagner, 1998. "Central Banking in Transition Countries," IMF Working Papers 98/126, International Monetary Fund.
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Cited by:
(explanations, 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.)

  1. Amina Lahrèche-Révil & Juliette Milgram, 2006. "Exchange-rate policies and trade in the MENA countries," ThE Papers 06/07, Department of Economic Theory and Economic History of the University of Granada.. [Downloadable!]
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