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Exchange Rate Policy Tensions: A Comparative Study between North Africa and Central & Eastern Europe

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  • Ali Massoud
  • Julius Horvath

Abstract

The performance of small open economies depends - to an extent - on the tension between government¡¯s economic policy preferences and actual behavior. This tension can be nicely studied by analyzing the behavior of exchange rates, where one observes tensions between proclaimed de jure and de facto exchange rate policies. Typically a country makes a de jure commitment to a peg if it attempts to persuade markets of its strict monetary-policy priorities; similarly a country makes a de jure commitment to a float if it wants to keep monetary policy in its own hands. In this paper we measure the flexibility of exchange rate which partially helps in deciphering the de facto behavior. For this purpose, we use comparative data of two sets of countries: North African as well as Central and Eastern European.

Suggested Citation

  • Ali Massoud & Julius Horvath, 2015. "Exchange Rate Policy Tensions: A Comparative Study between North Africa and Central & Eastern Europe," Applied Economics and Finance, Redfame publishing, vol. 2(4), pages 25-35, November.
  • Handle: RePEc:rfa:aefjnl:v:2:y:2015:i:4:p:25-35
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    More about this item

    Keywords

    Exchange rate policy; de facto exchange rate regimes; and exchange market pressure;

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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