Exchange Rate Variability, Pressures and Optimum Currency Area Criteria: Implications for the Central and Eastern European Countries

Roman Horvath

No 78, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: This paper estimates the medium-term determinants of the bilateral exchange rate variability and exchange rate pressures for 20 developed countries in the 1990s. The results suggest that optimum currency area criteria explain the dynamics of bilateral exchange rate variability and pressures, to a large extent. Next, we predict exchange rate volatility and pressures for the Central and Eastern European Countries (CEECs). We find that CEECs encounter exchange rate pressures approximately at the level of Euro area countries before their euro adoption.

Keywords: Exchange Rates; Optimum Currency Area; Euro Adoption; GMM (search for similar items in EconPapers)
JEL-codes: E58 F15 F31 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2005, Revised 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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