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Finding Stability in a Time of Crisis: Lessons of East Asia for Eastern Europe

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  • Paul D. McNelis

    (Fordham University and Hong Kong Institute for Monetary Research)

Abstract

This paper examines the options of small open economies in Eastern Europe pegged to the Euro, in a time of crisis. Specifically, should Bosnia and Herzegovina, Bulgaria, Latvia and Lithuania move to full Euro area accession, as Estonia, Slovakia, and Slovenia have done, or follow the examples of Poland, the Czech Republic, and Hungary and opt out of the Euro area? This paper argues that going forward to full monetary union offers benefits over a pure fixed exchange-rate regime. Specifically, the experience of Hong Kong at the time of the Asian crisis in the late 1990's, illustrates the benefits of a credible currency link during a time of crisis.

Suggested Citation

  • Paul D. McNelis, 2014. "Finding Stability in a Time of Crisis: Lessons of East Asia for Eastern Europe," Working Papers 052014, Hong Kong Institute for Monetary Research.
    • Handle: RePEc:hkm:wpaper:052014
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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