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Exchange Market Pressure in Central European Countries from the Eurozone Membership Perspective

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  • Stavarek Daniel

    (School of Business, Administration in Karviná, Department of Finance, Silesian University in Opava, Univerzitní nám. 1934/3, 733 40 Karviná, Czech Republic)

Abstract

This paper estimates the exchange market pressure (EMP) in four Central European countries (Czech Republic, Hungary, Poland, Slovakia) over the period 1993-2006. Therefore, it is one of very few studies focused on this region and the very first paper applying concurrently model-dependent as well as model-independent approaches to EMP estimation to these countries. The results obtained suggest that the approaches lead to inconsistent findings. They often differ in identification of the principal development trends, as well as the magnitude and direction of the pressure. The paper provides evidence that a shift in the exchange rate regime towards the quasi-fixed ERM II should not stimulate EMP growth. However, it is highly probable that some episodes of the excessive EMP will make the fulfillment of the exchange rate stability criterion more difficult in all of the countries analyzed.

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Bibliographic Info

Article provided by De Gruyter Open in its journal South East European Journal of Economics and Business.

Volume (Year): 3 (2008)
Issue (Month): 2 (November)
Pages: 7-18

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Handle: RePEc:vrs:seejeb:v:3:y:2008:i:2:p:7-18:n:1

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Keywords: Exchange Market Pressure; Model-dependent Approach; Model-independent Approach; European Union; Euro-candidate Countries;

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References

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  1. PENTECOST, Eric J. & VAN HOOYDONK, Charlotte & VAN POECK, André, 1997. "Measuring and estimating exchange market pressure in the EU," SESO Working Papers 1997009, University of Antwerp, Faculty of Applied Economics.
  2. Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
  3. Jeffrey D. Sachs & Aaron Tornell & Andrés Velasco, 1996. "Financial Crises in Emerging Markets: The Lessons from 1995," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1), pages 147-216.
  4. Barry Eichengreen & Andrew K. Rose & Charles Wyplosz, 1994. "Speculative Attacks on Pegged Exchange Rates: An Empirical Exploration with Special Reference to the European Monetary System," NBER Working Papers 4898, National Bureau of Economic Research, Inc.
  5. Weymark, Diana N, 1998. "A General Approach to Measuring Exchange Market Pressure," Oxford Economic Papers, Oxford University Press, vol. 50(1), pages 106-21, January.
  6. André Van Poeck & Jacques Vanneste & Maret Veiner, 2007. "Exchange Rate Regimes and Exchange Market Pressure in the New EU Member States," Journal of Common Market Studies, Wiley Blackwell, vol. 45, pages 459-485, 06.
  7. Evan Tanner, 2002. "Exchange Market Pressure, Currency Crises, and Monetary Policy," IMF Working Papers 02/14, International Monetary Fund.
  8. Weymark, Diana N, 1997. "Measuring Exchange Market Pressure and Intervention in Interdependent Economies: A Two-Country Model," Review of International Economics, Wiley Blackwell, vol. 5(1), pages 72-82, February.
  9. Graciela Laura Kaminsky, 1997. "Leading Indicators of Currency Crises," IMF Working Papers 97/79, International Monetary Fund.
  10. Weymark, Diana N, 1997. "Measuring the degree of exchange market intervention in a small open economy," Journal of International Money and Finance, Elsevier, vol. 16(1), pages 55-79, February.
  11. Girton, Lance & Roper, Don, 1977. "A Monetary Model of Exchange Market Pressure Applied to the Postwar Canadian Experience," American Economic Review, American Economic Association, vol. 67(4), pages 537-48, September.
  12. Weymark, Diana N., 1995. "Estimating exchange market pressure and the degree of exchange market intervention for Canada," Journal of International Economics, Elsevier, vol. 39(3-4), pages 273-295, November.
  13. Don E. Roper & Stephen J. Turnovsky, 1980. "Optimal Exchange Market Intervention in a Simple Stochastic Macro Model," Canadian Journal of Economics, Canadian Economics Association, vol. 13(2), pages 296-309, May.
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Cited by:
  1. Stavarek, Daniel & Dohnal, Marek, 2009. "Exchange Market Pressure in Central Europe: An Application of the Girton-Roper Model," MPRA Paper 15744, University Library of Munich, Germany.
  2. Mirdala, Rajmund, 2009. "Exchange rate pass-through to domestic prices in the Central European countries," MPRA Paper 19282, University Library of Munich, Germany.
  3. Mirdala, Rajmund, 2009. "Interest rate transmission mechanism of the monetary policy in the selected EMU candidate countries (SVAR approach)," MPRA Paper 14072, University Library of Munich, Germany.
  4. Rajmund MIRDALA, 2009. "Shocking Aspects Of Monetary Integration (Svar Approach)," Journal of Applied Research in Finance Bi-Annually, ASERS Publishing, vol. 0(1), pages 52-62, June.

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