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Exchange Rate Variability, Pressures and Optimum Currency Area Criteria: Lessons for the Central and Eastern European Countries

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  • Roman Horvath

Abstract

This paper estimates the medium-term determinants of the bilateral exchange rate variability and exchange rate pressures for 20 developed countries in the 1990s. The results suggest that the optimum currency area criteria explain the dynamics of bilateral exchange rate variability and pressures to a large extent. Next, we predict exchange rate volatility and pressures for the Central and Eastern European Countries (CEECs). We find that the CEECs encounter exchange rate pressures at approximately the same level as the euro area countries did before they adopted the euro.

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Bibliographic Info

Paper provided by Czech National Bank, Research Department in its series Working Papers with number 2005/08.

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Date of creation: Dec 2005
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Handle: RePEc:cnb:wpaper:2005/08

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Keywords: Euro Adoption; Exchange Rates; GMM; Optimum Currency Area.;

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Cited by:
  1. Vít Bubák & Filip Žikeš, 2009. "Distribution and Dynamics of Central-European Exchange Rates: Evidence from Intraday Data," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 59(4), pages 334-359, Oktober.

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