Resource title

Sources of real exchange rate fluctuations in Central and Eastern Europe: temporary or permanent?

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Resource description

This paper investigates, using the SVAR model of Clarida and Gali (1994), the sources of real exchange rate fluctuations in eight Central and East European new EU member states. Theoretically, one should expect the real exchange rates of Exchange Rate Mechanism II participants to be primarily driven by temporary shocks and those of ERM II outs by permanent shocks. Our results reveal an opposite pattern. We conclude that the sources of real exchange rate movements and the usefulness of nominal exchange rates as shock absorbing instruments were not the decisive factor behind these countries decisions concerning the ERM II participation.

Resource author

Agnieszka Stazka

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/25921

Resource license

Adapt according to the presented license agreement and reference the original author.