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Pegging to the Dollar and the Euro

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  • Honohan, Patrick
  • Lane, Philip R

Abstract

The newly launched euro has already accumulated some "trackers"--that is, countries that attempt to maintain exchange rate stability with it. In this paper, we ask whether the existence of trackers should be a matter of concern for the European Union. To gain some perspective, we review the historical experience of the US with respect to dollar trackers. We identify and analyse the countries most likely to track the euro. Although the aggregate size of the group of potential euro trackers is small relative to the euro zone, we argue that this does not justify an attitude of benign neglect. Rather, we make recommendations for EU policy towards euro trackers, arguing in favour of some limited and conditional support for stable bilateral exchange rates. Copyright 1999 by Blackwell Publishers Ltd.

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  • Honohan, Patrick & Lane, Philip R, 1999. "Pegging to the Dollar and the Euro," International Finance, Wiley Blackwell, vol. 2(3), pages 379-410, November.
  • Handle: RePEc:bla:intfin:v:2:y:1999:i:3:p:379-410
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Devereux, Michael B. & Lane, Philip R., 2003. "Understanding bilateral exchange rate volatility," Journal of International Economics, Elsevier, vol. 60(1), pages 109-132, May.
    2. Michael B. Devereux & Philip R. Lane & Juanyi Xu, 2006. "Exchange Rates and Monetary Policy in Emerging Market Economies," Economic Journal, Royal Economic Society, vol. 116(511), pages 478-506, April.
    3. Joao Loureiro & Manuel m.f. Martins & Ana paula Ribeiro, 2010. "Cape Verde: The Case For Euroisation," South African Journal of Economics, Economic Society of South Africa, vol. 78(3), pages 248-268, September.
    4. Kawai, Masahiro & Akiyama, Shigeru, 2000. "Implications of the currency crisis for exchange rate arrangements in emerging East Asia," Policy Research Working Paper Series 2502, The World Bank.
    5. Philip R. Lane, 2006. "Global Bond Portfolios and EMU," International Journal of Central Banking, International Journal of Central Banking, vol. 2(2), May.
    6. Kenen, Peter B., 2000. "Currency areas, policy domains, and the institutionalization of fixed exchange rates," LSE Research Online Documents on Economics 20170, London School of Economics and Political Science, LSE Library.
    7. Philip Lane, 2013. "International Capital Flows and Domestic Financial Conditions: Lessons for Emerging Asia," The Institute for International Integration Studies Discussion Paper Series iiisdp438, IIIS.
    8. Patrick Honohan & Philip R. Lane, 2003. "Divergent inflation rates in EMU," Economic Policy, CEPR;CES;MSH, vol. 18(37), pages 357-394, October.
    9. Iikka Korhonen & Mare Randveer, 2015. "Assessment of the Euros's implications for European economic development," Bank of Estonia Working Papers wp2000-02, Bank of Estonia, revised 03 Feb 2015.
    10. Cotter, John, 2000. "Volatility and the Euro: an Irish perspective," MPRA Paper 3535, University Library of Munich, Germany.
    11. Philip R. Lane & Gian Maria Milesi-Ferretti, 2007. "Europe and global imbalances," Economic Policy, CEPR;CES;MSH, vol. 22, pages 519-573, July.
    12. Philip Lane & Sébastien Wälti, 2006. "The Euro and Financial Integration," The Institute for International Integration Studies Discussion Paper Series iiisdp139, IIIS.
    13. Kawai, Masahiro & Takagi, Shinji, 2000. "Proposed strategy for a regional exchange rate arrangement in post-crisis East Asia," Policy Research Working Paper Series 2503, The World Bank.
    14. Lane, Philip R., 2005. "Global bond portfolios and EMU," Working Paper Series 553, European Central Bank.
    15. Masahiro Kawai & Shinji Takagi, 2012. "A Proposal for Exchange Rate Policy Coordination in East Asia," Chapters,in: Monetary and Currency Policy Management in Asia, chapter 9 Edward Elgar Publishing.

    More about this item

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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