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Speculative Attacks on the Drachma and the Changeover to the Euro

Author

Listed:
  • Tassos Anastasatos

    (Eurobank EFG)

  • Constantina Manou

    (Bank of Greece)

Abstract

This article examines speculative attacks against the Greek drachma from 1960 until the adoption of the euro in 2001. The analysis is preceded by a historical review. Subsequently, using monthly data on a plethora of economic, financial and political variables, a range of Limited Dependent Variable Models (both binomial and multinomial) is estimated. This methodology allows devaluations to be differentiated from speculative pressure which was successfully repelled. Findings suggest that, until the early 1990s, speculative attacks were largely related to domestic macroeconomic imbalances. However, the effort to fulfill the Maastricht criteria disciplined policies. Thereafter, disturbances were more related to contagion from international crises due to increasing international interdependence.

Suggested Citation

  • Tassos Anastasatos & Constantina Manou, 2008. "Speculative Attacks on the Drachma and the Changeover to the Euro," Economic Bulletin, Bank of Greece, issue 31, pages 49-77, November.
  • Handle: RePEc:bog:econbl:y:2008:i:31:p:49-77
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    drachma; adoption of euro; speculative attacks;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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