Monetary convergence of the EU accession countries to the eurozone: A theoretical framework and policy implications

Orłowski, Lucjan T.

doi:10.1016/j.jbankfin.2004.06.022

“…al., 2003), monetary strategies based on flexible exchange rate targeting Wollmershäuser, 2001 and, and flexible DIT policies with an ancillary objective of exchange rate stability (Eichengreen, 2001;Orlowski, 2001bOrlowski, , 2003Orlowski, , 2004bJonas and Mishkin, 2003). The flexible variant of DIT appears to be conducive to achieving the principal goals of convergence because its strategic and operational framework facilitates price stability as well as the overall financial stability of the converging transitional economies, as underscored for instance by Tuma (2003) and Orlowski (2001bOrlowski ( , 2004b. Thus in essence, a flexible DIT framework that gives some consideration to exchange rate stability appears to be a proper venue for achieving both a lower inflation and exchange rate risk.…”

Section: Synchronization Of Dual-target: Low Inflation and Exchanmentioning

confidence: 99%

Exchange Rate Risk and Convergence to the Euro

Orłowski

¹

2004

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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 EconStor may Abstract:This paper proposes a new monetary policy framework for effectively navigating the path to adopting the euro. The proposed policy is based on relative inflation forecast targeting and incorporates an ancillary target of declining exchange rate risk, which is suggested as a key criterion for evaluating the currency stability. A model linking exchange rate volatility to differentials over the euro zone in both inflation (target variable) and interest rate (instrument variable) is proposed. The model is empirically tested for the Czech Republic, Poland and Hungary, the selected new Member States of the EU that use direct inflation targeting to guide their monetary policies. The empirical methodology is based on the TARCH(p,q,r)-M model. JEL classification: E42, E52, F36, P24.

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“…Whereas, this convergence hypothesis has been widely tested in the economic growth dimension, recent applications to financial markets is gaining ground and becoming increasingly popular (Brada et al, 2005;Orlowski, 2005;Kim et al, 2005Kim et al, , 2006Elyasiani et al, 2007;Eun & Lee, 2010;Su et al, 2010;Narayan et al, 2011).…”

Section: Introductionmentioning

confidence: 99%

African Stock Market Performance Dynamics: A Multidimensional Convergence Assessment

Asongu

¹

2013

Journal of African Business

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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. convergence for the most part is between 12% and 28% per annum. As a policy implication, countries should work towards adopting common institutional and structural characteristics that favor stock market development. Terms of use: Documents in

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“…After eliminating constraining exchange rate regimes in the form of currency pegs, the Visegrad countries adopted direct inflation targeting (DIT). Under the DIT nominal exchange rates are likely to exhibit increasing volatility because of less importance related to exchange rate stability and rising pressure on domestic inflation (Orlowski, 2005). Other sources of exchange rate volatility are the increasing openness of the economy and instabilities related to the balance of payments (Kočenda and Valachy, 2006).…”

Section: Online Firstmentioning

confidence: 99%

Survey of Volatility and Spillovers on Financial Markets

Kočenda¹

2018

Prague Economic Papers

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Abstractin this survey article, we present a rich extent of literature on volatility and its propagation on financial markets via spillovers. We document how new approaches or improved existing methodologies lead to results that offer richer insights than those derived from standard econometric techniques. moreover, the implications of the results can be related to a wide set of markets as the surveyed articles cover emerging and developed european markets as well as the United states.

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Monetary convergence of the EU accession countries to the eurozone: A theoretical framework and policy implications

Cited by 42 publications

References 25 publications

Exchange Rate Risk and Convergence to the Euro

Exchange Rate Risk and Convergence to the Euro

African Stock Market Performance Dynamics: A Multidimensional Convergence Assessment

Survey of Volatility and Spillovers on Financial Markets

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