 OUTPUT VOLATILITY IN MACEDONIA: A ROLE FOR THE EXCHANGE RATE?Revista Tinerilor Economisti (The Young Economists Journal), 2010, vol. 1, issue 14, 143-158 Abstract: The study aims to empirically explore the relationship between exchange-rate rigidity and output volatility for Macedonia, building on the flaws of the existing, though scarce literature on the topic. Specifically, it carefully constructs the output volatility regression; considers the measure of output volatility; and accounts for the endogeneity bias doubted to be present in the respective literature. Moreover, it utilizes a Hodrick-Prescott definition of volatility, to avoid persistent series which are obtained by using rolling standard deviations. The empirical investigation covers the period 1998:Q1 - 2009:Q2 and uses a GMM estimator. We find that, in general, a TOT shock opts to increase output volatility, but under a more flexible regime, it starts to affect the output fluctuations negatively, implying a role of a buffer. Quite the contrary, when nominal shocks (monetary and/or fiscal) hit the economy, a more rigid alternative of the exchange rate is preferable. Keywords: exchange-rate regime; output volatility (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:aio:rteyej:v:1:y:2010:i:14:p:143-158 Access Statistics for this article Revista Tinerilor Economisti (The Young Economists Journal) is currently edited by Ionascu Costel More articles in Revista Tinerilor Economisti (The Young Economists Journal) from University of Craiova, Faculty of Economics and Business Administration Contact information at EDIRC. |
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