Insulating property of the flexible exchange rate regime: A case of Central and Eastern European countries
Marek Dąbrowski () and
Justyna Wróblewska ()
International Economics, 2020, vol. 162, issue C, 34-49
We examine the insulating property of flexible exchange rates in CEE economies considering that they have adopted different regimes. We estimate a set of Bayesian structural VAR models with common serial correlations using data spanning 1998q1-2015q4. We derive the long-term identifying restrictions from a macroeconomic model. We find that irrespective of the exchange rate regime, real shocks primarily drive output. However, its reactions to these shocks are substantially stronger under less flexible regimes, whereas the responses to nominal shocks are similar. Hence, the insulating property of flexible regimes can reduce the costs from economic shocks.
Keywords: Open economy macroeconomics; Exchange rate regimes; Real and nominal shocks; Bayesian structural VAR; Common serial correlation (search for similar items in EconPapers)
JEL-codes: F33 C11 F41 E44 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Insulating property of the flexible exchange rate regime: A case of Central and Eastern European countries (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:inteco:v:162:y:2020:i:c:p:34-49
Access Statistics for this article
International Economics is currently edited by Valerie Mignon and Marcelo Olarreaga
More articles in International Economics from Elsevier
Bibliographic data for series maintained by Haili He ().