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The Euro as a Monetary Anchor in the CEECs

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  • Agnès Bénassy-Quéré

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  • Amina Lahrèche-Révil

Abstract

We study whether Central and Eastern European Countries (CEECs) have an incentive to use the euro as a monetary anchor. Adapting a cross-section estimation method initiated by Bayoumi and Eichengreen, we show that, compared to an optimum currency area standard, the CEECs have paid too much attention to the USD in the past and should prefer the euro to the dollar as a nominal anchor. Through a theoretical model that takes external constraints into account, we then show that the CEECs should also have an incentive to stabilize their currencies in real terms against a basket where the euro would be prominent. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • Agnès Bénassy-Quéré & Amina Lahrèche-Révil, 2000. "The Euro as a Monetary Anchor in the CEECs," Open Economies Review, Springer, vol. 11(4), pages 303-321, October.
  • Handle: RePEc:kap:openec:v:11:y:2000:i:4:p:303-321
    DOI: 10.1023/A:1008331008940
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    References listed on IDEAS

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    1. Frankel, Jeffrey A & Rose, Andrew K, 1998. "The Endogeneity of the Optimum Currency Area Criteria," Economic Journal, Royal Economic Society, vol. 108(449), pages 1009-1025, July.
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    6. Paul R Masson, 1999. "Monetary and Exchange Rate Policy of Transition Economies of Central and Eastern Europe after the Launch of EMU," IMF Policy Discussion Papers 99/5, International Monetary Fund.
    7. Bayoumi, Tamim & Eichengreen, Barry, 1996. "Operationalizing the Theory of Optimum Currency Areas," CEPR Discussion Papers 1484, C.E.P.R. Discussion Papers.
    8. John Williamson, 1994. "Estimating Equilibrium Exchange Rates," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 17.
    9. Philipp Hartmann, 1996. "The Future of the Euro as an International Currency: a Transactions Perspective," FMG Special Papers sp91, Financial Markets Group.
    10. Helmut Wagner, 1998. "Central Banking in Transition Countries," IMF Working Papers 98/126, International Monetary Fund.
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    Citations

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    Cited by:

    1. Ricci, Luca Antonio, 2008. "A Model of an Optimum Currency Area," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 2, pages 1-31.
    2. Carlos Vieira & Isabel Vieira, 2012. "Assessing The Endogeneity Of Oca Conditions In Emu," Manchester School, University of Manchester, vol. 80, pages 77-91, September.
    3. Nikolay Nenovsky & Kalina Dimitrova, 2002. "Dual Inflation Under the Currency Board: The Challenges of Bulgarian EU Accession," William Davidson Institute Working Papers Series 487, William Davidson Institute at the University of Michigan.
    4. Bekiros, Stelios & Marcellino, Massimiliano, 2013. "The multiscale causal dynamics of foreign exchange markets," Journal of International Money and Finance, Elsevier, vol. 33(C), pages 282-305.
    5. Bekiros, Stelios D. & Diks, Cees G.H., 2008. "The nonlinear dynamic relationship of exchange rates: Parametric and nonparametric causality testing," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1641-1650, December.
    6. Carlos Vieira & Isabel Vieira, 2013. "Monetary Integration In Eastern And Southern Africa: Choosing A Currency Peg For Comesa," South African Journal of Economics, Economic Society of South Africa, vol. 81(3), pages 356-372, September.
    7. Michal SKOREPA, 2013. "Troubles in the Euro Area Periphery: The View through the Lens of a Simple Convergence-Sensitive Optimum Currency Area Index," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 63(2), pages 129-151, May.
    8. Amina Lahrèche-Révil & Juliette Milgram, 2006. "Exchange-rate policies and trade in the MENA countries," ThE Papers 06/07, Department of Economic Theory and Economic History of the University of Granada..
    9. André, NYEMBWE & Konstantin, KHOLODILIN, 2005. "North-South Asymmetric Relationships : Does the EMU Business Affect Small African Economies ?," Discussion Papers (ECON - Département des Sciences Economiques) 2005032, Université catholique de Louvain, Département des Sciences Economiques.
    10. Gern, Klaus-Jürgen & Hammermann, Felix & Schweickert, Rainer & Vinhas de Souza, Lúcio, 2004. "European monetary integration after EU enlargement," Kiel Discussion Papers 413, Kiel Institute for the World Economy (IfW).
    11. Arratibel, Olga & Rodriguez-Palenzuela, Diego & Thimann, Christian, 2002. "Inflation dynamics and dual inflation in accession countries: a 'New Keynesian' perspective," Working Paper Series 0132, European Central Bank.

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