Exchange-rate policy in eastern Europe and EU integration
DOI:
https://doi.org/10.13133/2037-3643/9932Keywords:
Exchange RatesAbstract
The paper examines potential conflicts between rapid EU integration of economies in transition (EiTs) and their pursuing catch-up by focusing on exchange-rate policies. After justifying the proposed inquiry, official pronouncements on ER policies that EU candidates are expected to pursue in the run-up to and upon their accession are summarized, and the salient features of recent debates on ER regimes recalled. Inasmuch as EiTs must modernize and reconcile this obligation with EU membership, in spite of the EU's cohesion experience, the paper combines real and nominal convergence issues with institutional changes upon EU accession to draw a novel perspective on the desirable postaccession transition regime for EiTs with a fairly active ER policy and the EU's cohesion strategy. Core components of such a strategy are advocated.
JEL Codes: F31, P33, F33
References
ANDORKA, R. (1996), "Heading toward modernization?", The Hungarian Quarterly, vol. 37, Autumn, pp. 90-98.
BACKE., P. (1999), "Exchange rate regimes in central and eastern Europe: a brief review of recent changes, current issues and future challenges", Focus on Transition, no. 2, pp. 47-67.
BALASSA, B. (1964), "The purchasing power parity doctrine: a reappraisal", Journal of Political Economy, vol. 72, no. 6, pp. 584-96.
BANERJI, A. and G.G. GELOS (2000), "Does Bulgaria suffer from a competitiveness problem? - a look at real exchange rate indicators and export performance", in "Bulgaria: selected issues and statistical appendix", International Monetary Fund Country Report, no. 00/54, April, pp. 7-36.
BEGG, D , L. HALPERN and C. WYPLOSZ (1999), "Monetary and exchange rate policies, EMU and central and eastern Europe", Forum Report of the Economic Policy Initiative, no. 5, CEPR and Eastwest Institute, New York and London.
BEGUM, J. (2000), "Real exchange rates and productivity: closed-form solutions and some empirical evidence", International Monetary Fund Working Paper, no. WP/00/99, June.
BLANCHARD, O. and M. KREMER (1997), "Disorganization", Quarterly Journal of Economics, vol. 112, no. 4, pp. 1091-126.
CANZONERI, M., R. CUMBY, B. DIBA and G. EUDEY (1998), "Trends in European productivity: implications for real exchange rates, real interest rates and inflation differentials", Osterreichische Nationalbank Working Paper, no. 27, April.
CARLIN, W., J. HASKEL and P. SEABRIGHT (2001), "Understanding `the essential facts about capitalism': markets, competition and creative destruction", National Institute Economic Review, no. 175, pp. 67-84.
COOREY, S., M. MECAGNI and E. OFFERDAL (1998), "Achieving low inflation in transition economies: the role of relative price adjustment", Finance & Development, vol. 35, no. 1, pp. 30-33.
CORKER, R., C. BEAUMONT, R. VAN ELKAN and D. IAKOVA (2000), "Exchange rate regimes in selected advanced transition economies - coping with transition, capital inflows, and EU accession", International Monetary Fund Discussion Paper, no. PDP/00/3, April.
DABÓS, M. and V.H. JUAN-RAMÓN (2000), "Real exchange rate response to capital flows in Mexico: an empirical analysis", International Monetary Fund Working Paper, no. WP/00/108, June.
DAHRENDORF, R. (1990), Reflections on the Revolution in Europe - In a Letter Intended to Have Been Sent to a Gentleman in Warsaw, Times Books, New York.
DARVAS, Z. and G. SZAPARY (2000), "Financial contagion in five small open economies: does the exchange rate regime really matter?", International Finance, vol. 3, no. 1, pp. 25-51.
DE BROECK, M. and T. SLOK (2001), "Interpreting real exchange rate movements in transition economies", International Monetary Fund Working Paper, no. WP/01/6, May.
DIBOOGLU, S. and A.M. KuTAN (2001), "Sources of real exchange rate fluctuations in transition economies: the case of Poland and Hungary", Journal of Comparative Economics, vol. 29, no. 2, pp. 257-75.
DORNBUSCH, R. (1996), "The effectiveness of exchange-rate changes", Oxford Review of Economic Policy, vol. 12, no. 3, pp. 26-38.
EC (1997), "Amsterdam European Council, 16 and 17 June 1997 - presidency conclusions, Annex II", Brussels.
EC (1999), "Enlarging the European Union - reports on progress towards accession by each of the candidate countries", Brussels, 13 October.
EC (2000), "Enlargement strategy paper", Brussels.
EC (2001), "Exchange rate aspects of enlargement", European Economy, Supplement C, no. 1, pp. 1-3.
EMS, E. (1999), "EMU, accession and the catching-up process", Focus on Transition, no. 2, pp. 90-91.
FISCHER, S. (2001), "Exchange rate regimes: is the bipolar view correct?", Journal of Economic Perspectives, vol. 15, no. 2, pp. 3-24.
GRAFE, C. and C. WYPLOSZ (1997), "The real exchange rate in transition economies", CEPR Discussion Paper, no. 1773, December.
HALPERN, L. and C. WYPLOSZ (1997), "Equilibrium exchange rates in transition economies", IMF Staff Papers, vol. 44, no. 4, pp. 430-61.
HAVRYLYSHYN, O. et al. (1999), "Latvia: selected issues and statistical appendix", International Monetary Fund Staff Country Report, no. 99/99, September.
ILZKOVITZ, F. (1996), "Challenges to the monetary and exchange rate policies of central and east European acceding countries: an EU perspective," in O. Radzyner and P. Havlik eds, Monetary Policy in Central and Eastern Europe: Challenges of EU Integration, Osterreichische Nationalbank and The Vienna Institute for Comparative Economic Studies, Vienna, pp. 241-57.
JAKAB, Z.M. and M.A. KOVACS (2000), "Determinants of real exchange rate fluctuations in Hungary", Russian and East European Finance and Trade, vol. 36, no. 3, pp. 64-94.
KAKKAR, V. and M. OGAKI (1999), "Real exchange rates and nontradables: a relative price approach", Journal of Empirical Finance, vol. 6, no. 2, pp. 193-215.
KOPITS, G. (1999), "Implications of EMU for exchange rate policy in central and eastern Europe", International Monetary Fund Working Paper, no. 99/9, January.
LIARGOVAS, P. (1999), "An assessment of real exchange rate movements in the transition economies of central and eastern Europe", Post-Communist Economies, vol. 11, no. 3, pp. 299-318.
MACDONALD, R. (1998), "What do we really know about real exchange rates?", Osterreichische Nationalbank Working Paper, no. 28, June.
MACDONALD, R. and L. RICCI (2001), "PPP and the Balassa Samuelson effect: the role of the distribution sector", International Monetary Fund Working Paper, no. WP/01/38, March.
MASSON, P.R. (1999), "Monetary and exchange rate policy of transition economies of central and eastern Europe after the launch of EMU", International Monetary Fund Policy Discussion Paper, no. PDP/99/5, July.
MAURER, L. (1999), "The current state of accession negotiations - specific focus: EMU and the free movement of capital", Focus on Transition, no. 2, pp. 101-04.
RANDZIO-PLATH, C. (2001), "Eastern enlargement and monetary union", Intereconomics, vol. 36, no. 2, pp. 72-76.
ROGERS, J.H. (1999), "Monetary shocks and real exchange rates", Journal of International Economics, vol. 49, no. 2, pp. 269-88.
SAMUELSON, P.A. (1964), "Theoretical notes on trade problems", Review of Economics and Statistics, vol. 46, no. 2, pp. 145-54.
SIEBERT, H. (2001), "Die EU-Osterweiterung erfordert em n neues Konvergenzkriterium", Handelsblatt Wirtschafts und Finanzzeitung, 22. Februar, reproduced in Deutsche Bundesbank - A usziige aus Presseartikeln, no. 9, 23. Februar, pp. 14-15.
SOLBES, P. (2001), "The European Union, EMU, and enlargement", Intereconomics, vol. 36, no. 2, pp. 68-71.
STRAUSS, J. (1997), "The influence of traded and nontraded wages on relative prices and real exchange rates", Economics Letters, vol. 55, no. 3, pp. 391-95.
SZAPARY, G. (2000), "Maastricht and the choice of exchange rate regime in transition economies during the run-up to EMU", National Bank of Hungary Working Paper, no. 7, October.
SZAPARY, G. (2001), "Transition countries' choice of exchange rate regime in the run- up to EMU membership", Finance & Development, vol. 38, no. 2, pp. 26-29.
TEMPRANO-ARROYO, H. and R.A. FELDMAN (1998), "Selected transition and Mediterranean countries: an institutional primer on EMU and EU relations", International Monetary Fund Working Paper, no. WP/98/82, June.
UNECE (2001), "Economic transformation and real exchange rates in the 2000s: the Balassa-Samuelson connection", Economic Survey of Europe, 2001, no. 1, United Nations Publication, New York, sales no. E.01.II.E.14, pp. 227-39.
VAN BRABANT, J.M. (1998), The Political Economy of Transition - Coming to Grips with History and Methodology, Routledge, London and New York.
VAN BRABANT, J.M. (1999), "The impact of widening on outsiders", in Remaking Europe - the European Union and the Transition Economies, Rowman & Little-field, Lanham and Boulder, pp. 183-210.
VAN BRABANT, J.M. (2001), "Exchange-rate policy, EU integration, and catch-up modernization", Russian and East European Finance and Trade, vol. 37.
VAN BRABANT, J.M. (2001), "Governance and accession post-Nice - is the light green?", paper prepared for the ASSA meetings in Atlanta, 4-6 January 2002, August.
WE0 (2000), World Economic Outlook October 2000 Focus on Transition Economies, International Monetary Fund, Washington.
WESS (2001), World Economic and Social Survey, 2001, United Nations publication, New York, sales no. E.01.11.C.1.
WILLIAMSON, J. (2000), Exchange Rate Regimes for Emerging Markets: Reviving the Intermediate Option, Institute for International Economics, Washington.
WILLIAMSON, J. (2001), "Exchange rate policy in Latin America: the costs of the conventional wisdom", paper presented at the conference "A broad agenda of crisis prevention and response: addressing global economic imbalances in the north and boom-bust cycles in the south", organized by FONDAD, 1-2 March, mimeographed.
WÓJCIK, C. (2000), "A critical review of unilateral euroization proposals: the case of Poland", Focus on Transition, no. 2, pp. 48-76.
ZANELLO, A. and D. DESRUELLE (1997), "A primer on the IMF's Information Notice System", International Monetary Fund Working Paper, no. WP/97/71, May.
Downloads
Published
How to Cite
Issue
Section
License
