I n January 1999, eleven European countries abandoned their respective national currencies and monetary independence to adopt a common currency, the Euro.1 This event, in which several industrialized countries formed a currency union, stands out in modern monetary history by its uniqueness, and in due time, it will allow for a better understanding of the implications of different monetary arran...

the objective of this study is to provide a partial equilibrium analysis of the effects of tariff and exchange rate policy on the net exports with the particular emphasis on the selected economic sectors. the eight economic sectors in the model are agriculture; food, beverages and tobacco; textiles; wood; chemicals; construction; paper and miselaneous which contains metallic and non merallic pr...

We test a simple model of exchange rate regime choice with data for 65 non-OECD countries covering the period 1980-94. We find that the variance of output at home and in potential target countries as well as the correlation between home and foreign real activity are powerful and robust predictors of exchange rate regime choice. Surprisingly, a more volatile foreign economy can be an argument in...

This paper studies how the monetary policy regime affects the relative importance of nominal exchange rates and inflation rates in shaping the response of real exchange rates to shocks. We document two facts about countries with floating exchange rates where monetary policy controls inflation using a short-term interest rate. First, the current real exchange rate predicts future changes in the ...

This paper investigated the relationship between expected inflation and nominal interest rates in Nigeria and the extent to which the Fisher effect hypothesis holds, for the period 1970-2012. We attempted to advance the field by testing the traditional closed-economy Fisher hypothesis and an augmented Fisher hypothesis by incorporating the foreign interest rate and nominal effective exchange ra...

In this paper we present a two-country dynamic general equilibrium model of ex ante unequally developed countries. The model explains a key feature recently observed in transition economies, i.e. he long-run trend real exchange rate appreciation, through investments in quality. Our exchange rate projections bear important policy implications, which we illustrate on the conflict between the infl...

The present paper incorporates a mechanism of rules-based central-bank interventions into a Dornbusch-type framework. We show that the implied reactions of exchange rates and interest rate differentials in response to a monetary shock depend crucially on the particular monetary policy feedback rule. The Dornbusch case of positively correlated and overshooting nominal and real exchange rates as ...

In this analysis the interdependence between foreign exchange markets and stock markets for selected accession and cohesion countries is discussed. This includes basic theoretical approaches. Monthly data for the nominal stock market indices and nominal exchange rates are used, where Ireland, Portugal, Spain, Greece, Poland, Czech Republic, Slovenia, and Hungary are included in the analysis. Fr...