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How Central and Eastern European Countries Choose Exchange Rate Regimes

  • Agnieszka Markiewicz


In this study, we identify the main determinants of the exchange rate regime choices in Central and Eastern European countries (CEECs). For this purpose, we use an ordered logit model for the offi cial (de jure) and the actual (de facto) exchange rate classifi cations. We fi nd that trade openness and concentration, infl ation differentials, international reserves stocks and fi nancial conditions are the main determinants of the selection of exchange rate regimes in the CEECs.

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Article provided by Oesterreichische Nationalbank (Austrian Central Bank) in its journal Focus on European Economic Integration.

Volume (Year): (2006)
Issue (Month): 2 ()
Pages: 69-84

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Handle: RePEc:onb:oenbfi:y:2006:i:2:b:2
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  1. Michael D. Bordo, 2003. "Exchange Rate Regime Choice in Historical Perspective," IMF Working Papers 03/160, International Monetary Fund.
  2. Savvides, Andreas, 1990. "Real exchange rate variability and the choice of exchange rate regime by developing countries," Journal of International Money and Finance, Elsevier, vol. 9(4), pages 440-454, December.
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  8. Rizzo, Jean-Marc, 1998. "The economic determinants of the choice of an exchange rate regime: a probit analysis," Economics Letters, Elsevier, vol. 59(3), pages 283-287, June.
  9. Reinhart, Carmen & Rogoff, Kenneth, 2004. "The modern history of exchange rate arrangements: A reinterpretation," MPRA Paper 14070, University Library of Munich, Germany.
  10. J. Marcus Fleming, 1962. "Domestic Financial Policies under Fixed and under Floating Exchange Rates (Politiques finacièrieures intérieures avec un système de taux de change fixe et avec un système de taux de change fluctua," IMF Staff Papers, Palgrave Macmillan, vol. 9(3), pages 369-380, November.
  11. Taylor, John B., 1983. "`Rules, discretion and reputation in a model of monetary policy' by Robert J. Barro and David B. Gordon," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 123-125.
  12. von Hagen, Jürgen & Zhou, Jizhong, 2002. "De facto and official exchange rate regimes in transition economies," ZEI Working Papers B 13-2002, University of Bonn, ZEI - Center for European Integration Studies.
  13. Levy-Yeyati, Eduardo & Sturzenegger, Federico, 2005. "Classifying exchange rate regimes: Deeds vs. words," European Economic Review, Elsevier, vol. 49(6), pages 1603-1635, August.
  14. Collins, Susan M., 1996. "On becoming more flexible: Exchange rate regimes in Latin America and the Caribbean," Journal of Development Economics, Elsevier, vol. 51(1), pages 117-138, October.
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  16. Sebastian Edwards, 1996. "The Determinants of the Choice between Fixed and Flexible Exchange-Rate Regimes," NBER Working Papers 5756, National Bureau of Economic Research, Inc.
  17. Boone, Laurence & Maurel, Mathilde, 1999. "An Optimal Currency Area Perspective of the EU Enlargement to the CEECs," CEPR Discussion Papers 2119, C.E.P.R. Discussion Papers.
  18. Linne, Thomas & Axel Bruggermann, 2003. "Are the Central and Eastern European Transition Countries still vulnerable to a Financial Crisis? Results from a Multivariate Logit Analysis," Royal Economic Society Annual Conference 2003 141, Royal Economic Society.
  19. Markiewicz, Agnieszka, 2006. "Choice of exchange rate regime in transition economies: An empirical analysis," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 484-498, September.
  20. Robert J. Barro & David B. Gordon, 1983. "Rules, Discretion and Reputation in a Model of Monetary Policy," NBER Working Papers 1079, National Bureau of Economic Research, Inc.
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