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The Effect of Nominal Exchange Rate Volatility on Real Macroeconomic Performance in the CEE Countries

  • Olga Arratibel

    (BCE - Banque Centrale Européenne - Banque Centrale Européenne)

  • Davide Furceri

    (OCDE - Organisation de coopération et de développement économiques - OCDE)

  • Reiner Martin

    (BCE - Banque Centrale Européenne - Banque Centrale Européenne)

  • Aleksandra Zdzienicka-Durand

    (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

This paper analyzes the relation between nominal exchange rate volatility and several macroeconomic variables, namely real per output growth, excess credit, foreign direct investment (FDI) and the current account balance, in the Central and Eastern European EU Member States. Using panel estimations for the period between 1995 and 2008, we find that lower exchange rate volatility is associated with higher growth, higher stocks of FDI, higher current account deficits, and higher excess credit. The results are economically and statistically significant, and robust.

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Paper provided by HAL in its series Post-Print with number halshs-00456606.

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Date of creation: 2011
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Publication status: Published in Economic Systems, Elsevier, 2011, 35 (2), pp. 261-277
Handle: RePEc:hal:journl:halshs-00456606
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00456606
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