IDEAS home Printed from
   My bibliography  Save this paper

EMU and the Stability and Volatility of Exchange Rates


  • Mikael Bask

    (UmeƄ University)

  • Xavier de Luna


"Do countries that do not participate in the Economic and Monetary Union, EMU, have currencies that are less stable, and therefore more sensitive to shocks to the economy, than countries that participate in the EMU? Does a membership in the European Union, EU, make any difference for countries not included in the EMU? In order to answer these questions, the dynamics of a large number of exchange rates is investigated. The stability of a dynamical system can be described by computing the Lyapunov exponents, where the largest exponent and the sum of all exponents are of particular interest. For instance, the sum is a measure of speed of convergence of two different trajectories of the system. Hence, for a non-chaotic dissipative system, the closer the sum is to zero the more unstable the system is. Thus, the Lyapunov exponents for the exchange rates are estimated, and it is investigated whether these exponents have changed during the launch of the common European currency. Moreover, it has been claimed that a membership in the EMU will reduce the size and frequency of the shocks to the economy. Therefore, structural changes in the volatility of the exchange rates is another focus of interest.

Suggested Citation

  • Mikael Bask & Xavier de Luna, 2001. "EMU and the Stability and Volatility of Exchange Rates," CeNDEF Workshop Papers, January 2001 4A.2, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  • Handle: RePEc:ams:cdws01:4a.2

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ams:cdws01:4a.2. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.