Following the yellow brick road? The Euro, the Czech Republic, Hungary and Poland

Jesús Rodríguez-López () and Jose L. Torres ()

No E2006/02, Economic Working Papers at Centro de Estudios Andaluces from Centro de Estudios Andaluces

Abstract: This paper uses a combination of VAR and bootstrapping techniques to analyze whether the exchange rates of some New Member States of the EU have been used as output stabilizers (those of the Czech Republic, Hungary and Poland), during 1993-2004. This question is important because it provides prior insights on the costs and benefits from entering the European Monetary Union (EMU). For these countries, joining the EMU is not optional but mandatory, although there is not a definite deadline. Thereby, if the exchange rate works as a shock absorber, monetary independence could be retained for a longer period. Our main finding is that the exchange rate could be a stabilizing tool in Poland and the Czech Republic, although in Hungary it appears as a propagator of shocks. Also, in these three countries, demand and monetary shocks account for most of the variability in both nominal and real exchange rates.

Keywords: EMU; exchange rate; Structural VAR; stationary bootstraps (search for similar items in EconPapers)
JEL-codes: C31 F31 F33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-fmk, nep-mac, nep-mon and nep-tra
Date: 2006
View list of references

Downloads: (external link)
http://www.centrodeestudiosandaluces.info/PDFS/E200602.pdf (application/pdf)

Related works:
Working Paper: Following the yellow brick road? The Euro, the Czech Republic, Hungary and Poland (2006)
Working Paper: Following the yellow brick road? The Euro, the Czech Republic, Hungary and Poland
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cea:doctra:e2006_02

Access Statistics for this paper

More papers in Economic Working Papers at Centro de Estudios Andaluces from Centro de Estudios Andaluces
Address: c/ Bailén 50. 41001 Sevilla
Contact information at EDIRC.
Series data maintained by Teresa Rodríguez ().