Exchange Rate Regime Choice in Central and Eastern European Transitional Economies

Vladimir Klyuev ()

Comparative Economic Studies, 2002, vol. 44, issue 4, 85-117

Abstract: The article develops a model of exchange rate regime choice centered on the tradeoff between internal price stability and external competitiveness. The model allows for institutional costs of altering exchange rate arrangements. The main implication of the model is a nonlinear relationship between the rate of inflation and the choice of regime for the next period. The model also suggests that a major inflationary shock, like the one to which all Central and Eastern European economies were subject when they allowed prices to be determined by the market, should give rise to a tightening of the exchange rate regime, followed by a gradual introduction of more flexibility as inflation subsides. A series of regressions on a sample of thirteen Central and Eastern European economies yield results consistent with the hypothesis. Comparative Economic Studies (2002) 44, 85–117; doi:10.1057/ces.2002.21

Date: 2002
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.palgrave-journals.com/ces/journal/v44/n4/pdf/ces200221a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/ces/journal/v44/n4/full/ces200221a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
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: https://EconPapers.repec.org/RePEc:pal:compes:v:44:y:2002:i:4:p:85-117

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/41294/PS2

Access Statistics for this article

Comparative Economic Studies is currently edited by Nauro Campos

More articles in Comparative Economic Studies from Palgrave Macmillan, Association for Comparative Economic Studies Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().