Exchange Rates in Central Europe: A Blessing o+L2762r a Curse?

Kuijs, Louis; Borghijs, Alain

doi:10.5089/9781451841794.001

Cited by 14 publications

(1 citation statement)

References 4 publications

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“…Na druhej strane je však vhodné v týchto krajinách analyzovať široké spektrum efektov spojených so stratou menovej autonómie a osobitne vplyvov vyplývajúcich zo vzdania sa flexibility menových kurzov národných mien po prijatí eura (Arratibel, Furceri, Martin a Zdzienicka, 2011). Aj keď boli menové kurzy týchto krajín výrazne ovplyvňované vývojom menového kurzu eura na medzinárodných devízových trhoch, ich pohyblivosť im umož-ňovala odrážať pôsobenie podnetov spojených s domácim ekonomickým vývojom (Borghijs a Kuijs, 2004).…”

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Exchange Rate Pass-Through to Domestic Prices in New EU Member Countries

Mirdala¹,

Ďurčová²

2016

Politicka ekonomie

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Exchange Rate Pass-Through to Domestic Prices in New EU Member CountriesEuropean Union member countries are currently exposed to the large complex of the economic crisis implications. Poor macroeconomic performance together with an increased uncertainty on the financial markets causes is accompanied with increased exchange rate volatility. As the result exchange rates determine macroeconomic development of the countries during the crisis period the way that seems to differ in comparison with the pre-crisis period. Considering the wide variety of effects that exchange rates transmit to the domestic economy from abroad in the paper we focus on the external price impulses and their impact on the domestic price indexes in the new EU member states. VAR methodology is implemented to investigate responsiveness of exchange rate to the exogenous price shock to examine the dynamics (volatility) in the exchange rate leading path followed by the unexpected oil price shock and effect of the unexpected exchange rate shift to domestic price indexes to examine its distribution along the internal pricing chain. Our results revealed differences in absorption capabilities of exchange rates in countries with rigid and flexible exchange rate arrangements. Implications are even stronger considering distortionary effects of the crisis period.Keywords: exchange rate, pass-through effect, inflation, VAR, impulse-response function JEL Classification: C32, E31, F41 ÚvodSchopnosť menového kurzu prenášať pôsobenie vonkajších šokov do domácej ekonomiky predstavuje v odborných kruhoch často diskutovanú tému a to nielen v súvislosti s prebiehajúcim procesom menovej integrácie v podmienkach krajín EÚ, ale aj negatív-nymi dôsledkami hospodárskej krízy (Berka, Devereux a Engel, 2012). Nové členské krajiny EÚ, ktoré prijali záväzok participovať na projekte spoločnej meny, prirodzene zvažujú pozitívne a negatívne aspekty jednotnej meny. Termín prijatia eura sa v mnohých krajinách posúva najmä v kontexte pripravenosti, výrazne poznamenanej dôsledkami hospodárskej krízy (udržateľnosť plnenia maastrichtských konvergenčných kritérií sa *1 Rajmund Mirdala (rajmund.mirdala@tuke.sk), Júlia Ďurčová (julia.durcova@tuke.sk), Ekonomická fakulta, Technická univerzita, Košice. Príspevok je súčasťou riešenej výskumnej úlohy 1/0994/15.

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Exchange Rate Pass-Through to Domestic Prices in New EU Member Countries

Mirdala¹,

Ďurčová²

2016

Politicka ekonomie

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Exchange rates and asymmetric shocks in small open economies

Alexius

Post

2008

Empir Econ

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in March 2005Abstract If floating exchange rates stabilize shocks rather than create shocks, a country that joins a monetary union or fixes its exchange rate looses a stabilizing mechanism. We use a first difference structural VAR on trade weighted macroeconomic data to study the role of floating exchange rates for five "small open economies" with inflation targets. By including both domestic and foreign variables and using a combination of long and short-run restrictions, we identify asymmetric shocks more carefully than previous studies. Only in Sweden and Canada does the nominal exchange rate appreciate significantly in response to asymmetric demand shocks and depreciate to asymmetric supply shocks. Most exchange rate movements are caused by speculation and are not responses to fundamental shocks. However, these exchange rate shocks have negligible effects on output and inflation. Our findings indicate that exchange rates are neither stabilizing nor destabilizing but may be loosely characterized as disconnected from the rest of the economy.

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Is the floating exchange rate a shock absorber in Albania? Evidence from SVAR models

Miteza

Tanku²,

Vika³

2023

Econ Change Restruct

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The choice of a foreign exchange regime hinges primarily on whether the real exchange rate acts as a shock absorber or reverberator for macroeconomic fluctuations. This policy choice is considered central especially prior to joining currency areas such as the Eurozone. We investigate whether Albania’s current floating exchange rate regime contributes to macroeconomic stability, or generates volatility. Using three different structural vector autoregression techniques, and an expanded five-variable model, we show that the real exchange rate has played a shock absorbing role, buffering the Albanian economy primarily from real demand shocks. The analysis reveals that monetary shocks and supply-side shocks have modest contributions in real exchange rate volatility. This evidence in favor of the “shock absorbing” view of exchange rates lends support to Albania’s policy choice of a flexible exchange rate system. If in future Albania considers joining a currency area, its monetary authority will need to pay attention to real currency misalignments as well as the availability and flexibility of alternative adjustment mechanisms.

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Exchange Rates in Central Europe: A Blessing o+L2762r a Curse?

Cited by 14 publications

References 4 publications

Exchange Rate Pass-Through to Domestic Prices in New EU Member Countries

Exchange Rate Pass-Through to Domestic Prices in New EU Member Countries

Exchange rates and asymmetric shocks in small open economies

Is the floating exchange rate a shock absorber in Albania? Evidence from SVAR models

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