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Which Exchange-Rate Regime in the EMU Accession Period: An Empirical Analysis


  • Ray Barrel
  • Dawn Holland
  • Kateøina Šmídková


This study is the second part of larger empirical work focused on the timing of European Monetary Union (EMU) accession and on the selection of a pre-accession exchange-rate regime. The tool of our empirical analysis used in both studies is a model simulation that benefits from a consistent macro framework and estimated model equations. Five accession countries were studied. The results demonstrate that it is important to design pre-EMU exchange-rate regimes independently, according to the characteristics of each accession country, such as openness, flexibility, or level of financial wealth. Following the European Exchange-rate Mechanism (ERM II) as a core monetary-policy strategy for the whole of the pre-EMU period may be beneficial only for some accession countries. While Poland would benefit from introducing a fixed-rate regime for the pre-EMU period, for example, the Czech Republic and Slovenia would benefit more from maintaining a floating exchange rate. For Estonia and Hungary, both options have comparable benefits.

Suggested Citation

  • Ray Barrel & Dawn Holland & Kateøina Šmídková, 2003. "Which Exchange-Rate Regime in the EMU Accession Period: An Empirical Analysis," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 53(5-6), pages 243-260, May.
  • Handle: RePEc:fau:fauart:v:53:y:2003:i:5-6:p:243-260

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    accession countries; exchange-rate regime; empirical analysis;

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions


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