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Beliefs about Exchange-Rate Stability: Survey Evidence From the Currency Board in Bulgaria

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Author Info
Neven T. Valev ()
John A. Carlson ()
Abstract

We use unique survey data from Bulgaria’s currency board to examine the reasons for persistent incomplete credibility of a financial stabilization regime. Although it produced remarkably positive effects in terms of sustained low inflation since 1997, the currency board has not achieved full credibility. This is not uncommon in other less-developed countries with fixed exchange rate regimes. Our results reveal that incomplete credibility is explained primarily by concerns about external economic shocks and the persistent high unemployment in the country. Past experiences with high inflation do not rank among the top reasons to expect financial instability in the future.

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Publisher Info
Paper provided by William Davidson Institute at the University of Michigan Stephen M. Ross Business School in its series William Davidson Institute Working Papers Series with number 2004-705.

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Length: 30 pages
Date of creation: 01 Jun 2004
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Handle: RePEc:wdi:papers:2004-705

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Related research
Keywords: Credibility; Currency Boards; Financial Stabilization Programs;

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Find related papers by JEL classification:
E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
F3 - International Economics - - International Finance

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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.:
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  4. Nenovsky, Nikolay & Hristov, Kalin, 2002. "The new currency boards and discretion: empirical evidence from Bulgaria," Economic Systems, Elsevier, vol. 26(1), pages 55-72, April. [Downloadable!] (restricted)
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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. Neven T. Valev, 2005. "From a currency board to the euro: Public attitudes toward unilateral euroization in Bulgaria," William Davidson Institute Working Papers Series wp736, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  2. Neven Valev, 2004. "From a Currency Board to the Euro: Public Attitudes toward Unilateral Euroization in Bulgaria," International Studies Program Working Paper Series, at AYSPS, GSU paper0423, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
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